THIRUVANANTHAPURAM: With Kerala LDF Government saying an emphatic “No’ to what it called the Union Government’s ‘blackmail’, the stage is set for a protracted legal battle on its suit against the attempt to choke the State financially.
It may be mentioned that a Kerala delegation led by State Finance Minister K N Balagopal had talks with the Union Government’s team, following a directive from the Supreme Court, to resolve the issue of the latter’s unfair decision to restrict Kerala’s net borrowing limit. The talks failed to achieve a breakthrough as the Union Government took the stand that it would release Rs 13,000 crore only if the State withdraws its suit filed in the apex court.
In his response, Balagopal said the Union Government’s pre-condition was tantamount to blackmail and choking the state financially. Kerala, he said, is entitled to over Rs 13,000 crore that the Union Government has agreed to release in return for withdrawing the suit. The State, he added, is entitled to this sum and it has nothing to do with the case in the apex court. “We are eligible for it even if the State had not opted to file the suit. Our stand is that we are entitled to around Rs 25,000 crore under various components such as the divisible pool share and borrowing limit. Balagopal accused the Union Government of showing scant respect to the Constitution.
Also, the insistence on Kerala withdrawing the suit first shows that the State has a solid case against the Union Government. The Union Government is also throwing a challenge to the people of the State in trying to prevent the State Government from seeking judicial remedy.
Now that the talks have failed, Kerala has the only option of continuing the legal battle. Accordingly, the apex court has decided to go ahead with the hearing of the State Government’s suit. The case is listed for hearing on March 6 and 7.
Kerala has also countered Union Finance Minister Nirmala Sitharaman’s claim that it had not held back any money due to the State. Ms Sitharaman had claimed that tax devolution to Kerala under the Congress-led UPI regime between 2004 and 2014 was Rs 46,303 crore. It had gone up to Rs 1,50,140 crore during 2014-2024.
Mr Balagopal, however, termed the claim as childish. The rise only indicates the natural growth over a period of time. An examination of the percentage of tax devolved to Kerala would reveal the true picture, he pointed out. For instance, in the pre-GST period, Kerala’s tax share had increased three-fold between 2004 and 2014. But the growth was a mere 2.8 per cent during 2013-2024. Kerala also did not gain in revenues despite a ten-fold growth in India’s Gross Domestic Product (GDP) during 2004-05 to 2023-24. Kerala’s share only grew from Rs 2,405 crore to Rs 21, 256 crore. In reality, this should have been 20 per cent more.
Moreover, Kerala would be eligible for an additional Rs 20,000 crore if it received its share from the cess and surcharges collected by the Union Government. In 2010, cess and surcharges, which need not be devolved to the States, accounted for only 10 per cent of the tax revenues of the Union Government. By 2019-20, it went up to 18 per cent and by 2021-22, to 28.1 per cent. As if this was not enough, the States also faced huge cuts in grants, Balagopal said.
Meanwhile, in another development that cannot but displease the Union Government, Kerala has expressed its inability to display Prime Minister Narendra Modi’s photograph in ration shops. Chief Minister Pinarayi Vijayan has refused to comply with the order, saying that it was only a part of the BJP’s election campaign. The State is also considering taking up the issue with the Election Commission. According to State Food and Civil Supplies Minister G R Anil, the Union Government had directed the State food department and the Food Corporation of India to display Modi’s photographs in over 14,000 ration shops in Kerala, and file a compliance report. It also directed to distribute ration goods in carry bags with Union Government logo. Anil said the State would not do it as it was not right to misuse the ration distribution system for election campaigning.
Kerala had also rejected, earlier a direction from the Union Government for branding houses constructed under the Pradhan Mantri Awas Yojana (PMAY). The order was to display the PMAY logo at the houses. In Kerala, houses are constructed under the LIFE Mission programme, in which the State Government bears more than 80 per cent of the cost.
With both sides hardening their respective stands, the stage is set for a long legal battle. Kerala hopes the apex court will do justice to its demand for release of funds the Union Government has held back in blatant violation of the Constitution. In a way, the Union Government has done Kerala a favour by putting preconditions for releasing funds. The former’s adamancy vindicates Kerala’s stand that the Union Government has been discriminating against it over the years, especially in financial matters. The ruling LDF can very well use this financial discrimination issue against the centre as an election plank in the coming Lok Sabha polls. (IPA Service)
