Kerala legislative assembly on Friday passed a resolution unanimously against the Union government’s moves to “encroach into the financial and legislative powers of the states”. Kerala Finance Minister K.N. Balagopal lamented in his resolution that states bear the lion's share of total expenditure in India, including social welfare, however, a significant share of the revenue income goes to the Union Government.
The resolution was passed under Rule 118 of Procedure and Conduct of Business in the Assembly. The Congress-led opposition did not ask for any change in the resolution. Incidentally, Speaker A N Shamseer declared it passed unanimously.
“When the 15th finance commission decided the share for states itself Kerala faced a major loss. And, bypassing the recommendations of the 15th finance commission, the Union government has cut the borrowing limit of Kerala with retrospective effect from 2021-22. The Union finance ministry has taken an action neglecting the recommendations, that has been recognised by the Union government and had been presented in both the houses of Parliament with the nod of honourable President, in the matter of borrowing limit. In addition to this, the grants due have been withheld. The assembly has no doubt that all these measures that endanger the federal system,” read the resolution.
The resolution also asserted that just as the Central Government has sovereignty over matters in the Union List, state Governments also have sovereignty over State matters. “Therefore, this House unanimously demands that the Central Government should abandon the anti-democratic approach of treating the states as subordinates of the Centre,” pronounced the resolution, while demanding the Modi government to go back from the moves to cut Kerala's credit limit and withholding grants.
After presenting the resolution in the assembly, Finance Minister Balagopal strongly criticized the Union budget, alleging that it “neglected” the state's needs. According to him, the budget lacked measures to stimulate the economic sector, provided no package to address the recession, and failed to deliver on promises for significant projects such as the Vizhinjam port, new railway projects, and new AIIMS.
The minister added that the Union government which talks about fiscal consolidation has budget with total expenditure 47 lakh crore and total borrowing is about 18 lakh crores. “This means that around 36 per cent of the Union budget is through borrowing. Also, if you observe the budget, 25 per cent of the total budget is given as interest,” minister presented the figures to counter the narrative against the state government that Kerala is in a debt trap.
The minister also raised the argument that the Union government has surpassed the borrowing limit set by the FRBM Act, which mandates limiting borrowing to 3 percent of GDP. “This year, it was around 5.8 to 5.9 percent. In the coming year, the Union government plans for it to be 5.1 percent. If we are allowed to borrow at least 4 percent of GDP, we could secure Rs 11,000 crore. Those suggesting that Kerala is in a debt crisis should consider these facts,” he said.
