Chief Minister Pinarayi Vijayan is chairing a meeting of MPs from Kerala ahead of the Parliament session. Nineteen of them are from the Congress-led United Democratic Front (UDF). Rajya Sabha MPs from Kerala are also attending.
The conference is taking place against the backdrop of a slump in State revenue, a sluggish economy, drop in NRI remittances, the surge in COVID-19 infections and increased public spending on pandemic prevention and social welfare.
Kerala is also pressing for full compensation of GST dues. It is unenthusiastic about the Centre's suggestion that States should raise loans to make up for the Union Government's "inability" to redeem the GST debt.
Increased spending
The State's spending on social welfare pensions, local self-government centred and community-based COVID-19 prevention programme, health care, free rations (87 lakh households) had increased exponentially. It had hoped that full compensation of GST dues by the Centre would help steady the State's tottering public finances. However, the money was not forthcoming.
The government had given many businesses a tax holiday until the pandemic situation improved. Its traditional streams of revenue had dried up. Nevertheless, the Centre is yet to announce a fiscal stimulus package for States or recompense GST compensation dues it owed them.
GST issue
The Centre had imposed the GST regime in 2016. At the time, it had promised the States a 14% increase in tax revenue. Moreover, the Centre had also pledged to make up for the shortfall in tax revenue caused due to the transition to the GST system.
As of now, the Centre owed the States 2.53 lakh crore in GST dues. It has pleaded inability to pay the dues. The Centre has cited the economic slump precipitated by the COVID-19 pandemic as a reason.
Instead, the Centre had put several borrowing options on the table, which was unacceptable to Kerala.
The Centre had suggested that States create a special window to raise money directly from the Reserve Bank of India. The States could also borrow from the open market via the RBI so as not to cause a spike in interest rates.
However, it was unwilling to backstop the loans or allow States to increase their borrowing limit. The Centre's stance, the government felt, was untenable.
By one account, MPs cutting across political lines felt the Centre was constitutionally obliged to pay States their share of the GST and the tax deficit caused due to the shift to the new regime. They also reportedly felt that Centre should not calculate the GST loss caused due to the pandemic separately.
Calamities
The MP's conference also dwelled on the air crash at Karipur airport in Kozhikode and the landslip in Pettimudi in Idukki.
Fishing sector
Mr Vijayan also reportedly drew the attention of MPS to the economic distress in the fishing sector. The fisher population of coastal States had borne the brunt of the COVID-19 outbreak. Many coastal localities had to abandon fishing operations due to the development of large community clusters. Turbulent seas and stormy weather had brought marine fishing to a halt. Kerala wants a special financial assistance package for coastal States to revive the fisheries sector.
Extra grains
The State has also sought extra allocation of rice grains and pulses to aid the pandemic affected citizens who were reeling under the loss of business and employment.
Kerala also wants the Centre to increase its annual borrowing limit for investing in infrastructure development. The global economic slowdown caused by the pandemic and increasing nativism in foreign countries had hobbled the chances of employment for NRIs, forcing lakhs to return home. Kerala also requires a special package to rehabilitate them.
The government is also seeking to liaison with other non-BJP ruled States to raise their concerns with the Centre jointly.
