Kerala Rallies Opposition States Against Central Government's Alleged Fiscal Injustice

The move comes in the wake of ongoing criticism by opposition leaders that the central government, led by the BJP, is manipulating financial allocations to disadvantage non-BJP states.

Thiruvananthapuram: In an escalating push against what is seen as economic marginalization, Kerala is spearheading an alliance of opposition-ruled states to confront the central government over its alleged suppression of fiscal federalism. As preparations are underway for the 16th Finance Commission's deliberations, Kerala has rallied states governed by opposition parties, including Punjab, Karnataka, Telangana, and Tamil Nadu, to voice their concerns about the uneven distribution of financial resources.

The move comes in the wake of ongoing criticism by opposition leaders that the central government, led by the BJP, is manipulating financial allocations to disadvantage non-BJP states. Speaking at the inaugural meeting, Kerala’s Chief Minister, Pinarayi Vijayan, addressed the pressing need for a united front. “The disparities in financial allocations by successive finance commissions have left states like Kerala at a disadvantage,” he stated, emphasising the broader impact on development efforts.

The conclave saw participation from senior ministers, including Telangana Deputy Chief Minister Mallu Bhatti Vikramarka, Karnataka Revenue Minister Krishna Byre Gowda, Punjab Finance Minister Harpal Singh Cheema, Tamil Nadu Finance Minister Thangam Thennarasu, and Kerala’s Opposition Leader VD Satheesan. The ministers jointly discussed strategies to present their case before the 16th Finance Commission, which is chaired by Dr A. Arvind Panagariya.

Speaking to ETV Bharat, Telangana Deputy Chief Minister Mallu Bhatti Vikramarka shed light on the stark fiscal imbalance, revealing that while states contribute over 37% of the country's revenue, they shoulder more than 62% of the nation's expenditures. He argued for an increase in the states' share of central tax revenue to at least 50%, noting the central government's reliance on cess and surcharges as a loophole to avoid sharing a larger chunk of tax revenue.

The numbers underscore the gravity of the issue. In 2011-12, cess and surcharges accounted for 9.4% of central revenues. By 2022-23, this figure had surged to 22.8%. This revenue, according to Wickremarka, is not included in the divisible pool, thus depriving states of their rightful share. Kerala Finance Minister KN Balagopal echoed similar concerns, highlighting the state’s diminishing allocation from the central government. “While Kerala’s share under the 10th Finance Commission was 3.875%, the 15th Finance Commission reduced this to 1.92%,” he told ETV Bharat. In contrast, the state of Uttar Pradesh continues to receive a substantial 17.9%.

The gathering reflected the collective frustration of opposition-ruled states, which claim that this ongoing financial discrimination hampers their development. Ministers at the conclave expressed hope that their unified stance would strengthen negotiations with the central government. Finance Minister KN Balagopal also hinted that Kerala intends to take further initiatives to mobilize more states in the fight for fair fiscal policies, marking this conclave as the first of many steps towards greater economic federalism.

The conclave comes as a prelude to the 16th Finance Commission's upcoming visit to Kerala, expected in December. Ministers are preparing to present their case comprehensively, to secure a fairer distribution of central tax revenues.

As Kerala and its allies rally to defend their fiscal autonomy, the political landscape surrounding centre-state financial relations looks set for a significant battle ahead. The opposition's fiscal conclave may well shape the national debate on federalism in the months to come.