LDF govt blames Centre for Kerala's financial crisis; UDF alleges mismanagement for economic woes

The Kerala Assembly on Wednesday witnessed heated exchanges between the ruling Left and the opposition UDF over the state's financial situation during a debate on the matter.

While the Congress-led opposition alleged that the extravagance, financial mismanagement, and poor tax collection by the Left government have pushed the state into an economic crisis, the Left Front blamed central policies for the same and accused the UDF of taking sides with the BJP-led Centre on the matter.

State Finance Minister K N Balagopal claimed that even as Kerala saw a substantial increase in its income and tax revenue in the last year, the BJP-ruled Centre was adamant on financially choking the state, which is why its share in central taxes, its borrowing limit, and its revenue deficit grant were cut short.

The minister also said the debt burden of the state was going down while its income and tax revenue increased by around 51 per cent last year -- a historical gain compared to previous years.

Balagopal was responding to the allegations by the UDF during the debate on a notice moved by the opposition to adjourn the House and discuss the alleged extravagance and mismanagement by the ruling Left Front that have led the state into the financial crisis and hampered various developmental projects and welfare schemes.

UDF MLA Roji M John, who moved the notice, claimed that the 15th Finance Commission had in 2020 allocated around Rs 53,000 crore to the state as a revenue deficit grant for the period from 2021-26, but Kerala used up most of that, except around Rs 4,000 crore, by 2023.

''So next year we will not get anything,'' he alleged.

He also alleged that the state government has failed to collect taxes on the sale of gold, the turnover of bars and hotels, and even the Integrated Goods and Services Tax (IGST), all of which indicated the administration's financial incompetence.

''Instead, they (government) increased fuel prices, the rate of electricity, the price of lottery tickets, alcohol prices, etc. They have imposed the tax burden on the common man while sparing the rich people,'' he claimed.

Regarding Balagopal's claim that the Centre cut short the state's borrowing limit by unfairly adding the loans taken by KIIFB to the debt of Kerala, John contended that UDF from the start had warned it would happen, but the same was disregarded by the Left Front.

''Now the state government has turned into an administration which is taking loans only uncontrollably,'' he alleged, adding that the only answer the LDF has to all these issues is that UDF MPs did not oppose the central policies affecting Kerala.

Leader of Opposition (LoP) in the assembly V D Satheesan and senior Congress leader Ramesh Chennithala too spoke along similar lines during the debate.

Satheesan said that the state government failed in tax collection and its decision to increase fuel prices has led to a drop in diesel sales in the state as some people were buying it from neighbouring Mahe and selling it here in black.

He also claimed that the state lost more than Rs 50,000 crore as IGST due to non-submission of proper documents and the same has been pointed out in reports of the Gulati Institute and the report of the Expenditure Review Committee.

The LoP also opposed the LDF contentions of blaming UDF MPs for allegedly not opposing the central policies.

Satheesan accused Balagopal of being 'incompetent' and the tax department of being a 'complete failure.' Chennithala said the LDF has ruined the state and contended that the future generations would not forgive it for that.

All the UDF allegations were refuted by Balagopal and other LDF MLAs who spoke during the debate.

They pointed to various welfare measures like payment of pensions, giving thousands of crores towards running of KSRTC and market intervention during Onam to control rising prices, implemented by the government in the state despite the financial difficulties and contended that there was no extravagance or mismanagement on its part.

Balagopal and Chief Minister Pinarayi Vijayan, however, accused the UDF MPs of not following through with their promise to jointly approach the Union Finance Minister and present a letter against the Centre's financial policies.

Irked by the repeated blaming of the UDF MPs, Satheesan said the Left Front had not answered the issues raised by the opposition and was only intent on blaming the MPs and therefore, they were staging a walkout.

Subsequently, the notice for adjournment was rejected by Speaker A N Shamseer.

In the morning, the Kerala government agreed to debate the adjournment motion by the Congress-led UDF opposition on the financial crisis being faced by the state.

Balagopal welcomed the opposition move, saying he was happy that the UDF wants to hold serious discussions on the financial situation of Kerala.

The state government has been claiming that Kerala is in a financial crisis, allegedly due to the economic policies of the Centre.

Balagopal has on several occasions in the past contended that the Centre was attempting to financially choke the state and hamper development and welfare measures in Kerala by cutting down its share in central taxes and restricting its borrowing limits, among other such steps.