What is the amount the BJP-ruled Centre has cheated out of Kerala this fiscal? This was the biggest puzzle thrown up during the discussion on Kerala's fiscal crisis in the Assembly on Wednesday.
Finance Minister K N Balagopal says it is Rs 57,000 crore. Another figure heard in the Assembly hall on Wednesday was Rs 61,000 crore.
It was Congress MLA Mathew Kuzhalnadan who first expressed his bafflement. "You and the Chief Minister were going around the state saying the Centre has deprived Kerala of Rs 57,000 crore. But in a letter you had sent to the Union Finance Minister on July 12 last year you say Rs 31,869 crore," Kuzhalnadan told the minister. He then gave a break up of the figure as stated in Balagopal's letter. Fall in Revenue Deficit grant - Rs 8,400 crore. Loss in GST compensation - Rs 12,000 crore. Reduction by way of restriction on borrowing limit - Rs 8,000 crore. Together - Rs 28,400 crore. "Then you spoke of the various unpaid entitlements to the education and health departments, which works out to Rs 3,469 crore," Kuzhalnadan said. Add this to Rs 28,400 and Kuzhalnadan said the figure denied to Kerala by the centre, by the minister's admission, amounted to only Rs 31,869 crore.
Even in this figure, Kuzhalnadan said the largest chunk of Rs 28,400 crore was only a "wish list", "the money we are begging from the Centre".
Kuzhalnadan argued it was inappropriate to claim as Kerala's entitlements the money under three heads - Revenue Deficit grant, GST compensation and borrowing.
He said Kerala's RD grant of Rs 53,734 crore over a five-year period was the highest in the country after West Bengal. "The shortage the minister speaks about is only relative to the last fiscal. The higher amounts were received in the previous years. In fact, last fiscal, Kerala received as RD grant more than what even Balagopal estimated. Then you kept mum about the windfall," Kuzhalnadan said.
As for the GST compensation, Kuzhalnadan said the first Pinarayi ministry had also agreed that it was enough for five years. Later Opposition Leader V D Satheesan ridiculed the finance minister for even making a claim for GST compensation. "You keep saying that Kerala's GST collection growth was 20% for the 2021-22 and 2022-23 fiscals. If this is accepted for argument's sake, how is Kerala going to receive the GST compensation when it is given only if the annual GST growth is less than 14%," Satheesan said.
Kuzhalnadan argued that it was fiscally improper for Kerala to ask for a higher borrowing limit. He said Kerala already has the second highest Debt-GSDP ratio in the country at 39.1%. Punjab has the highest at over 42%. More borrowings he said would worsen the fiscal situation.
The finance minister gave a complicated response to the UDF's take on the deprived amount. He said he was giving a "notional" figure. He said Kerala's share from the Centre's divisible pool had fallen from 3.8% to 1.9%. Essentially, Balagopal's figure of Rs 57,000 crore is a hypothetical figure arrived at by assuming that Kerala's share of the divisible pool was still 3.8%. Fact is, this percentage existed in the 80s, during the time of the 10th Finance Commission. In force is the 15th FC.
After poking a hole in what the UDF considers the LDF's inflated sense of Centre-induced deprivation, the Opposition Leader blamed shoddy and inefficient tax administration for Kerala's fiscal woes. He said this was one reason why the UDF was unwilling to participate in the LDF-sponsored protest in New Delhi on February 8.
Satheesan said Kerala's latest growth in GST collection was just 12%. Haryana's is 22%. Tamil Nadu 's, 22%. "And you say these states have to come to learn the model tax administration Kerala had put in place," Satheesan said. The finance minister had earlier said that tax officials from Haryana and neighbouring states had visited to learn from Kerala's tax system.
The Opposition Leader repeated his pet peeve that Kerala has not reformed and restructured its tax administration to adapt to the GST regime. "There is no surveillance, there is no intelligence, and it is free for inter-state players," Satheesan said. "We have become a tax defaulters haven. And by letting these defaulters scot free you are helping to shut down honest tax payers within the state," he said.
The Opposition Leader also flagged the poor collection from gold sales. He said the state's tax collection from gold had not progressed an inch from when the price of gold was Rs 500 a gram in 2000. Now gold costs over Rs 6,000 a gram.
The finance minister conceded that there were systemic challenges but maintained that Kerala was performing well. He said Kerala has achieved a revenue growth of Rs 71,000 crore during the last two years, which was nearly double the growth Kerala has realised in the previous 68 years.
The finance minister once again exhorted the Opposition to join the LDF's anti-Centre protest in New Delhi on February 8. "It is time for us to stand united for fiscal federalism," the minister said.
Muslim League leader P K Kunhalikutty gave a forthright reason for declining the Chief Minister's invite. "You called a bit late. You cannot expect us to be seen with you on the eve of the Lok Sabha polls," he said.
