Thiruvananthapuram |Going through a "growth phase", Kerala is poised for very good development in infrastructure, industrial as well as services sectors that will create more job opportunities, according to the state's Finance Minister K N Balagopal.
Amid concerns over the state's financial health, he asserted revenue generation has made a "giant leap" to Rs 71,000 crore in the last fiscal but the central government's "step motherly" treatment has resulted in a liquidity crunch.
In an interview with PTI, Balagopal cited reports by various agencies, including the recent Fitch Ratings, to affirm that the "state is now going through a very good economic growth phase." In recent months, the Left-ruled Kerala has been raising its voice against the BJP-led Centre's moves on the fiscal front, including the alleged delay in releasing GST funds and curbs on the state in terms of raising money.
Referring to the steps taken by the finance department for better revenue generation, the minister said that through efficient tax administration, the second Pinarayi Vijayan government, which came to power in 2021, has made a giant leap in state-owned tax revenue (SOTR) and claimed it was an indication of Kerala's economic growth.
Balagopal, a senior state CPI (M) leader, criticised the Central BJP-led government, alleging it was denying Kerala its legitimate shares from various resources, causing a serious liquidity crunch.
The Fitch Ratings recently revised the outlook on the Kerala Infrastructure Investment Fund Board (KIIFB) to stable from negative.
Various agencies including Fitch Ratings "assessed the financial position of the state, and they calculated how revenue generation is happening, how investment capital generation is happening, and how debts are coming down. There is a very notable improvement in all these areas post-covid-19", the minister stated.
He said Kerala is heading for "very good growth" in basic infrastructure and industrial sectors and asserted more service industries will come to the state, generating a lot of employment opportunities, and there will be a very good jump in the economy in 25 years.
"I am saying this on the basis of statistics," Balagopal said.
He said there was a giant leap in SOTR, which rose to Rs 71,000 crore in the last fiscal year from around Rs 47,000 crore in March 2021, the year in which the second Pinarayi Vijayan-led government came to power.
"It was a total of Rs 8,000 crore during the first five-year period of the previous Pinarayi Vijayan-led government . How is tax revenue increasing? It is not because of any tax hike. It is because of tax collection and the efficient administration of the tax system. If economic growth is there, tax revenue will increase.
"This shows that there will be good growth in the coming years. So, more investment will come, more infrastructure will come, and more employment will be generated," the minister said.
Balagopal said that because of the improvement in the overall atmosphere in the state, many of the people who are working abroad have expressed interest in coming back to the state and doing business here.
"I expect a lot of investment will come. We are spending a lot of money on research and development and employment opportunities. So, I am 100 per cent sure that this is a period where the growth of the economy and all-round development will be at a good pace", the minister said.
He, however, said all the positive developments in Kerala's economic front were due to the efficient intervention of the state government and accused the BJP-ruled Centre of denying the state its share of various tax resources.
"While we have made improvements in income generation and subsequent growth, the Centre has reduced sharply the revenue that we were getting earlier from the tax share and other kinds of resources", the minister said, citing the stoppage of GST compensation and a "sharp decline" in the revenue deficit grant.
Accusing the Centre of adopting a "step-motherly attitude" towards the state, Balagopal alleged "imbalance" in the distribution from the divisive poll and said it was due to the adoption of a new formula on the basis of the 2011 census by the Centre.
He alleged the Centre refused to give an extension to the GST compensation, ignoring the demands from all states and putting the state's exchequer in deep stress.
The minister said the Kerala Infrastructure Investment Fund Board (KIIFB) is now included in the public debt of the state by the Centre.
Compared to March 2021, the total expenditure of the state increased to more than Rs 25,000–30,000 crore in one year, and it was also due to the Rs 20,000 crore annual extra expenditure due to the hike in salary and pension of state government employees, Balagopal said.
He also cited the 28 per cent reduction in the central government's tax division to the state compared to 2020–2021 for the liquidity crisis.
"During 2020–21, out of the total revenue receipts, we were making around 55 per cent, the central government was giving around 45 per cent. Last year, it was 35 per cent by the central government, and the state government was forced to put 65 per cent. This year, we are compelled to make 72 per cent of the revenue income. " "The central government's part in the revenue share is reduced to 28 per cent. This is one of the lowest percentages of the central government's tax division", he said.
Balagopal said there was a huge disparity in revenue sharing between the Centre and states.
"As per the 15th Finance Commission, out of the total revenue of all of India, 63.5 per cent is going to the central government. Only its balance is going to the states." "But out of the total expenditure on this in the country, around 60 per cent is to be borne by the state governments. States are getting only 37 per cent of the revenue, while expenditures have gone up to 64 per cent. There is a huge disparity in it. There is no logic in it", he said.
Questioning the claim of cooperative federalism made by Prime Minister Narendra Modi and his Cabinet colleagues, Balagopal said, "If you take the case of Kerala, we were compelled to raise 72 per cent of revenue on our own, and the central government's part came down from 45-46 per cent to 28 per cent. Is this called cooperative federalism." He also slammed the MPs of the Congress-led UDF from Kerala for not raising the state's financial issues before the Union Government, alleging they were "playing tricks to make sure the Left government in Kerala is suffering" on that front.
