Is there a fiscal crisis in Kerala? FM fails to offer convincing answers

In hindsight, the LDF government's acceptance of the UDF's challenge on Monday to hold a debate in the Assembly on Kerala's fiscal crisis was courageous. By the end of the debate, it turned out that Finance Minister K N Balagopal did not have answers for many of the questions hurled at him by the UDF speakers. 

His defence, as usual, was constructed around victimhood. Like always, Balagopal blamed the Centre's vindictiveness for Kerala's plight. He regurgitated the same figures of presumptive losses Kerala suffered as a result of the Centre's discrimination. "If the state had earned the same annual revenue under the sales tax and VAT regimes, we could have earned ₹51,500 crore. If we had achieved the annual revenue growth of 14 per cent as promised by the Centre, we could have earned ₹54,000 crore. Instead, we earn just ₹32,000 crore now," the minister said. He conveniently masked the fact that the Centre had kept its promise and had paid Kerala a compensation amount for the first five years of the GST regime to ensure a 14 per cent annual growth in revenue. He also left untouched the GST Department's failure, a factor that UDF speakers repeatedly stressed.

The minister was busy vilifying the centre. He said the fall in the state's share from the divisible pool, drop in central grants and the Centre's willful reduction of the state's borrowing space had together caused Kerala an annual loss of ₹57,000 crore. And now with the rationalisation of the GST rates, Balagopal said Kerala would be deprived of ₹8,000-10,000 crore a year. 

Even before the minister reeled out these figures, Opposition Leader V D Satheeshan said the minister's numbers suffered from a credibility crisis. "Most of your numbers are not credible," he said. But this did not dissuade the minister from once again flaunting these numbers as proof of political martyrdom.  

However, the UDF poser was direct and fundamental. "Is there a fiscal crisis in Kerala as a result of the Centre's policies?" Congress MLA A P Anilkumar asked. "Please don't give a neither here nor there 'yes-no' answer," he said. 

But it was a shining example of a "yes-no" answer that the minister offered. "We are not receiving huge amounts of entitled funds. We have difficulties. In fact, difficulties are being created. But Kerala is about to become a one trillion dollar economy," Balagopal said, suggesting that despite the Centre-induced troubles, the economy is expanding. 

The minister had made the one trillion-dollar claim so often in the past that Muslim League leader P K Kunhalikutty seems to have found it funny. "If you say this is a trillion-dollar economy, why not pay the pending bills of contractors? Why have heart operations then ceased in our government hospitals?" Kunhalikutty said. Nonetheless, this taunt did not dissuade the minister from talking about the trillion-dollar economy in his speech.

While the minister spoke mostly of how the Centre was backstabbing Kerala, the UDF had specific questions related to the government's fiscal management.

Congress MLA Mathew Kuzhalnadan, who moved the adjournment motion for a discussion on the issue, said the government was a big failure in tax collection. He said the tax revenue from gold had remained stagnant, though gold prices had shot up. Ditto, he said was the revenue from liquor. Quoting from the GST fact sheet put out by the GST Department, Kuzhalnadan said that GST growth had fallen by 2.58 per cent.

The Opposition Leader, too, referred to the government's failure to tap more from gold. He said that before GST, gold was ₹500-600 per gram and ₹4,800 per sovereign. Now it was ₹10,000 a gram and ₹80,000 a sovereign. "Yet revenue from gold remains the same," Satheesan said.

He blamed the government for not coming up with a plan to tap additional revenue from gold and liquor. "The tax department is inefficient to the core," he said.

Satheesan said the crisis had derailed health and welfare programmes. "Equipment suppliers are not being paid and they have stopped supplies from September. As a consequence, heart surgeries are not being held in government medical colleges," he said. The government had not paid medical equipment suppliers ₹158 crore, he said.

UDF MLAs also pointed out that the crisis had badly impacted projects that benefit scheduled castes and scheduled tribes. Kuzhalnadan said that the government had stopped awarding half a sovereign for SC students who had secured A-plus for all subjects. "You have deprived 20,000 students of their half sovereign. You have pilfered their 10,000 sovereigns," Kuzhalnadan said.

Satheesan, too, said that the plan size for SC/ST projects had remained stagnant, and said that various SC/ST welfare disbursements were pending. 

The minister did not contest any of the failures pointed out by the UDF except the cut in SC/ST funds. He said the Opposition Leader's remarks on SC/ST assistance were misleading. The Opposition Leader promptly held up a reply provided in the Assembly by the SC/ST minister O R Kelu to reassert his claims. 

Kelu, in his written reply to Congress's Thiruvanchoor Radhakrishnan on September 18, gave a long list of SC/ST welfare schemes for which Balagopal was yet to provide. ₹9.42 crore for the scholarship of post-metric ST students, ₹3.42 crore as treatment assistance for SCs, ₹65 crore as intercaste marriage assistance for SCs and STs, ₹58 crore as marriage assistance for SCs, and ₹5.61 crore as foreign job assistance for SCs and STs. "Minor amounts are bound to remain pending. That will be paid up," the minister said.