The Communist Party of India (Marxist)-led Left Democratic Front (LDF) has planned to take its grievances and allegations against the BJP-led Central government of showing ‘neglect’ and ‘apathy’ towards Kerala to the national capital Delhi by organising a mega protest there on February 8.
Led by Kerala chief minister Pinarayi Vijayan himself, the strike at the Jantar Mantar will be attended by ministers of the Kerala government, all LDF MLAs, MPs of both Houses and leaders of the coalition partners as well as those of like-minded parties keen on preserving federal principles in the country, LDF convener EP Jayarajan announced earlier this week.
“The state government’s right to borrow funds is being denied. The Centre’s investments in the state are decreasing. Kerala has received the lowest railway allocation for a state in India. Projects like the Sabari Rail Corridor are not being taken forward. In short, the Centre is halting the development of the state and UDF leaders are not coming forward to call it out,” alleged Jayarajan at a press conference.
The LDF’s allegations
CM Vijayan has alleged that the BJP-led Centre financially squeezed Kerala by reducing its borrowing limit since 2017, failing to provide GST compensation on time and slashing the revenue deficit grants.
“The Centre has no power to curtail the borrowing limit set by the state government to meet its fiscal deficit, even on the recommendations of the Finance Commission. Since 2017, the Centre has been cutting the borrowing limit by including amounts from the public account and loans taken by state-owned entities like KIIFB and KSSPL,” the CM said at a briefing on Dec 14, 2023.
Under the Kerala Fiscal Responsibility Act, 2003, the borrowing limit of the state has been set at 3.5 percent of the Gross State Domestic Product (GSDP), which allows the government to allocate funds for plan and non-plan development activities in the budget, he said.
In December 2023, finance minister Nirmala Sitharaman said in Parliament that the net borrowing ceiling (NBC) of states including Kerala has been fixed at 3% of GSDP in FY 2023-24 as per Finance Commission recommendations. The state was entitled to ₹32,422 crore, but in FY 2023-24 the Centre reduced Kerala’s borrowing limit, allowing only ₹15,390 crore for the first 9 months of FY, leading to a shortfall of ₹13,000 crore, the Kerala government has claimed.
Vijayan added that since 2016-17, the total loss in eligible loan collection to the state due to the Centre’s restrictions is ₹1,07,513.09 crore. In 2020-21 alone, the loss incurred by the state due to inadequate borrowings was ₹9,614.3 crore. The losses in the next five years for the state will be in the range of ₹2-3 lakh crore, the Kerala CM added.
“Arrears have increased after the Centre reduced the loan limits. Over a thousand projects worth ₹82,000 crore planned to be implemented through KIIFB are in different stages. These projects will have to be abandoned if the Centre continues to interfere,” the CM said.
In fact, in December last year, Kerala filed a plea in the Supreme Court against the Centre under Article 131 of the Constitution requesting the top court to settle the Centre-state disputes, especially the cap on the borrowing limit, which is yet to come up for hearing.
“If the state is not able to borrow to the extent required based on the budget of the state, the state would not be able to complete its plans for the particular financial year… Therefore it is essential for the progress, prosperity and development of the state and its people that the state is able to exercise its constitutional rights and its borrowings are not impeded in any manner,” Kerala’s petition in the top court stated.
Union FM rejects charges
Countering the Kerala government’s charges that the Centre was withholding funds from the state, Union finance minister Nirmala Sitharaman, in November last year, said that the charges of withholding grants and funds meant for Kerala was a ploy to gain political mileage and mislead the people.
“You can challenge me in any court, I do not mind. Please go ahead. It gives me one more opportunity to put the facts before the court and say that this is what the story really is,” she said at a business conclave in Kerala.
In December last year, the FM noted that there was no proposal to relax the existing terms of borrowing capacity of states including Kerala for FY 2023-24 in Parliament. The Centre applies a common yardstick while fixing the annual borrowing limit of all state governments under Article 293(3) of the Constitution. This is guided by the recommendations of the Finance Commission, the FM added.
The FM said that Kerala received ₹36,231 crore as Revenue Deficit Grant from 2021-22 to 2023-24 (till November).
Congress says no to joint protest with Left
The Congress-led UDF in Kerala has turned down the CPM’s invitation to join the protest in Delhi on Feb 8, arguing that a combination of the state government’s mismanagement of finances and the Centre’s apathy towards it resulted in the financial crisis.
Leader of the Opposition in Kerala, VD Satheesan, said that the party cannot agree with the narrative that all the financial problems faced by Kerala are a result of the Centre’s neglect
