The report that the Narendra Modi government, on coming to power in 2014, had tried to cut funds allocated to the States is “shocking” and a “cause for concern,” Finance Minister K. N. Balagopal said on Friday.
Mr. Balagopal was reacting to remarks made by NITI Aayog Chief Executive Officer B.V.R. Subrahmanyam during a seminar that the Prime Minister had tried to get the 14th Finance Commission to reduce its recommendation of 42% tax share to the States. Mr. Subrahmanyam’s ‘revelation’ proves that the Kerala government’s long-standing grievances against the Centre on financial matters are true, Mr. Balagopal said.
The alternative
He noted that it was a highly placed official of the Union government who stated that a covert move was made to slash the financial rights of the States. That attempts were made to get the Finance Commission reduce the share from 42% to 32% is a cause for concern. The report says that when this attempt failed, the Union Budget was recast to reduce the share in Central schemes, Mr. Balagopal said.
Subsequently, the Union government had increasingly taken to the cess and surcharge route to mobilise resources. So much so that they accounted for 28% of the tax revenues of the Centre. “Through this, the stratagem of reducing the transfers to the States was implemented,” Mr. Balagopal alleged.
Suit in Supreme Court
The policies of the Union government and the changes in tax regimes have negatively impacted the resources of the State. Kerala has flagged these issues through its suit filed in the Supreme Court. The protest planned by the State government in New Delhi also raises these topics, he said.
In a Facebook post, former Finance Minister T.M. Thomas Isaac termed the attempt to get the share of the States reduced an unprecedented one in the history of the country.
