The declining share in devolution of tax revenue by the Central government has put the State government’s finances in a precarious situation often impeding its development agenda, Chief Minister Pinarayi Vijayan has said.
Virtually opening the State conference of the Kerala Non-Gazetted Officers’ Union (Kerala NGO Union) on Saturday, he said the Centre had curtailed the State’s powers to impose new taxes and thus limited its ability to generate its own revenue.
Kerala’s share of Central taxes and duties, as recommended by the 15th Finance Commission, had come down to 1.92%. It was 3.8% during the 10th Finance Commission (1995-2000) and 2.5% during the 14th Finance Commission. Mr. Vijayan said this was causing a lot of trouble in fiscal management.
In the previous financial year, Kerala got ₹19,891 crore as grants from the Centre considering our revenue deficit. However, the next year, we would get only ₹13,174 crore, and the year after that only ₹4,749 crore. By June 30 this year, the compensation the State had been getting for the loss in tax revenue after implementation of the Goods and Service Tax (GST) too would come to an end. The share in Centrally-devised schemes too would come down significantly.
However, this would not put a brake on the government’s efforts to convert the State into a knowledge economy, Mr. Vijayan said. The Chief Minister pointed out that development projects cannot be implemented only through Budget allocation of funds. The previous government relaunched the Kerala Infrastructure Investment Fund Board (KIIFB) to source funds from outside the Budget. “We had announced that development works worth ₹50,000 crore will be launched through the KIIFB. By the end of our first term in office, projects worth ₹62,000 crore had been initiated. More works will be taken up too,” Mr. Vijayan added.
