Kerala CM tells Centre its fiscal policies imperil State’s development and social progress

Chief Minister Pinarayi Vijayan said on Friday that Kerala apprised Union Finance Minister Nirmala Sitharaman that the Centre’s fiscal policies threatened to imperil the State’s development and hobble its expansive social security net. 

He said the recent GST rate revision, the US’ prohibitive tariffs on exports from Kerala — mainly marine products, spices, and agricultural produce — the Centre’s restrictions on the State’s borrowing limit, and the substantial IGST revenue recovery funds the Centre has sought from the State have hindered the State’s finances.

“The financial situation portends ill for the timely delivery of public services and hampers the State’s infrastructure development efforts,” he added. 

Mr Vijayan estimated the State revenue loss due to the Centre’s fiscal approach at ₹9,765 crore. He said the Centre has further reduced Kerala’s borrowing limit by ₹5,200 crore. It has also imposed a cap of ₹4,700 crore on “off-Budget” borrowings by including KIIFB’s fund mobilisation for critical infrastructure development in the State’s public debt. 

Mr Vijayan noted that there was no financial indiscipline on the part of Kerala to warrant such measures. “They are the fallout of decisions taken outside Kerala’s fiscal, administrative and fiscal jurisdiction”, he said. 

Mr Vijayan demanded that the Centre restore Kerala’s borrowing limit as an “interim relief”. He asked the Centre to repay the ₹965 crore it had collected from Kerala as IGST recovery. He also asked the Centre to defer the decision to slash Kerala’s borrowing limit till the formation of the next financial commission. 

Mr Vijayan said the Centre should allow Kerala to immediately borrow ₹6,000 crore to meet its undertaking to the Union Ministry of Transport to bear 25% of the total cost of land acquisition for national highway development. 

Mr Vijayan said Kerala did not reckon the demands as a special concession. He said the rectification was necessary for the State’s fiscal stability, development and protection of its social security net. 

Mr Vijayan termed the talks with Ms Sitharaman positive. “She promised that she would consider Kerala’s request with utmost gravity”, he added.