Centre can’t punish Southern states for implementing national policies: Kerala FM

As protest over plan allocation criteria for states gets louder, CPI(M)-ruled Kerala has taken the lead by convening a meeting of the finance ministers of southern states on April 10. In an interview to Hindustan Times, Kerala finance Minister Dr Thomas Issac said the grouping of southern states will remain as a pressure group against “anti-federal” policies of the BJP government.

Q. Population-based plan allocation has been the norm for many years so then why a fresh controversy now?

A: In the National Development Council we were promised that population won’t be a criteria while fixing plan allocation. But it was flouted. The Centre can’t punish states that successfully implemented most of the national policies. Kerala’s population growth has come down drastically while it has risen high in some northern states. Our move is not to divide north and south. Politics is also not involved. But at the same time we have to protect our state’s interests also. If population and development are main indicators the state would lose at least Rs 20,000 crore. We can’t afford such a drastic cut.

Q. Many states feel that they contribute a huge share to the Centre’s tax revenue but they get very little in return. Karnataka recently said it contributes 9.56 per cent of the central revenue but it gets back only 4.5%.

A: Their concerns are genuine. We are not saying all tax revenues should go to states but the proportion should be fair and equitable. That is the spirit of federalism. For example, at least 26% of India’s forex reserves come from Kerala expatriates every year. But our returns are not commensurate with our contribution. The gap will widen further if 2011 census will be made the benchmark.

Q. What is next?

A: Details can be worked out only after the meeting. But one thing is clear. We will remain as a pressure group. We have to unite against such anti-federal policies of the BJP government. After this we will also get in touch with other states like Punjab and Odissa. The Finance Commission should make tax system more amenable to states.

Q. You are a great votary of GST. Any regrets now?

A: Single tax was a welcome move. But GST was implemented in a hotchpotch manner. No serious study was done and it was pushed through in hurry. Like demonitisation, you can’t play with lives of people. Almost 10 months passed since it was implemented the GST network is not fully operational. Most of the rates were finalised without any study and forced to roll-back. Even the e-way bills have just been rolled out. From commoners to traders, everybody is cursing the GST because of its poor implementation.

Q: Why is Kerala not lowering tax on petroleum to help common man?

A: No, we can’t lose further revenue. The state revenue growth is below 10 per cent. When crude oil price plummeted, the Centre failed to reduce it but when prices are going up it should reduce tax to help people. Going by the poor economic condition of the state we can’t think of it now.