In his Budget speech, Finance Minister T.M. Thomas Isaac flayed the Centre for usurping the powers of States in all areas with unilateral decision-making, which is leading to the federal nature of the Constitution getting diluted every day.
“The incursion of the Central government into the State lists, nullifying the Seventh Schedule has become so rampant. Executive power is also being misused. The GST Council, the Fiscal Responsibility Act and the 15th Central Finance Commission all seem to have deprived the State governments of their entire fiscal freedom,” he said.
State stifled
Accusing the Centre of having an economic policy aimed at strangling the States financially, he said Kerala has been denied the scope for availing itself of any loan during the last quarter of the current financial year.
“Out of the internal revenue of the State, 3% is allowed as loan. Based on this, an amount of ₹2,4915 crore was earmarked in the State Budget. But by the middle of the financial year, the Centre informed that ₹5,325 crore would be cut off from the loan amount. Even by this criteria, we had the right to borrow ₹4,900 crore in the last quarter. But from this, ₹3,000 crore was again slashed arbitrarily. Hence we now have permission to take loan only for ₹1,920 crore. From this amount, ₹1,400 crore has to be paid to the Central government as repayment of loan availed in 2009,” he said.
Grants from the Centre are also being cut short. The Centre is not ready to give the GST compensation due for December 2019. The arrears will cross ₹3,000 crore in February. In addition to this, there is an indication that ₹6,866 crore received as tax share for the last quarter of the previous financial year would come down to ₹4,525 crore during the current financial year. Thus, there will be a shortfall of ₹8,330 crore in the Central assistance, putting unprecedented financial constraints on the State exchequer, he said.
