‘Provide more fiscal powers to states’, Kerala FM’s Budget wish


Kerala Finance Minister KN Balagopal on Friday urged the Centre to provide more fiscal powers to the states as well
as increase the shareable proportion of the GST collections.
Besides, he asked the central government to expedite approval for the semi-high-speed railway line or the Silverline
project from Thiruvananthapuram to Kasargod.
The demands were raised during the pre- consultations with Union Finance Minister Nirmala Sitharaman.
The Budget for 2023-24 is to be presented on February 1 next year.
The state economies are in the stage of transition from recession ushered in by the pandemic and “neo restrictions”
in the form of fiscal consolidation at this stage could only help the transitional cycle to move reversely.
“We submit that states must be given more fiscal powers/ autonomy to ensure cooperative federalism and
encourage state-specific efforts to attain growth and ensure social justice,” Balagopal said in the submission.
With respect to the Goods and Services Tax (GST), the demand is for increasing the shareable proportion of GST
collection from the 50:50 ratio to the 60:40 ratio in favour of the states as well as extending the GST compensation
The five-year GST compensation period ended in June this year.
According to the submission, the share of central surcharges and cesses have been increased from around 10
per cent to 20 per cent of the Gross Tax Revenue (10.4 per cent in 2011-12 and 19.90 per cent in 2020-21) over
the last decade.
“This has reduced the share of states from the divisible pool as a percentage of the Gross Tax Revenue of the
Union… the Union may restrict surcharges and cesses as a fixed per cent of Gross Tax Revenues (GTR) so that the
divisible pool of taxes does not shrink substantially,” it added.
Further, the minister has urged the Centre to rationalise cess and surcharges, and also enhance revenue-neutral
rates by taxing luxury items more.
Among others, the state has mooted the proposal of linking part of the additional borrowing limit with capital
“It will be a welcome move to have an expert committee to examine the specific liquidity problems faced by the
states, and Ways and Means and overdraft limits are redefined.”
Kerala has also sought a special package for the economic rehabilitation of the return migrants in the Budget.