Kerala seeks flexible fund for states in Union Budget

Kerala government has asked the Centre for a distinctive flexible fund pool earmarked in the Union Budget 2023-24 for the states, from which, devolutions can be made with respect to the state-specific demands or proposals that address the new generation issues being faced by the respective states. The state also sought to change the GST revenue sharing ratio from the present 50:50 to 60:40 between the states and the Union and reiterated its demand for a five year extension of GST compensation period.

Addressing the pre-Budget consultation meeting called by Union Finance Minister Nirmala Sitharaman, B N Balagopal, finance minister of Kerala, said the state is expecting a dip to the tune of ₹32,000 crore in its revenues in the next financial year due to several changes in the Centre-State revenue sharing systems in recent past.

"The tax share from the centre is decreasing continuously over the years from 3.875% during the award period of 10th Finance Commission to as low as 1.925% at present because of the state's advancements in social sector development," the minister said. Balagopal also pointed out that the revenue deficit grant will cease to exist by next year and GST compensation is already done away. He also cited newer restrictions imposed for borrowing consent under 293 of our Constitution and decline in the Revenue Neutral Rate from around 16% to 11% during the GST regime as the reasons for fall in Kerala's revenues.

The minister also wanted the practice of Centre spending more on subjects in the State List to be phased out and flexible funds with broad guidelines be given as grants to the States instead of Centrally Sponsored Schemes with rigid criteria.

Kerala's wish list for the Union Budget includes a special package for the economic rehabilitation of the returning migrants, interest subvention for the value-added production units in the agriculture and traditional industrial sector and expedite the approval for Semi High Speed Railway Line (Silverline Project) from Thiruvananthapuram to Kasargod.

The state government has also proposed the setting up of an expert committee by the Centre to examine the specific liquidity problems faced by the States, and Ways and Means and Overdraft limits are redefined.