Kerala's Fiscal Future: Push for Fairer Central Devolution

The 16th Finance Commission, led by Prof. Arvind Panagariya, began its Kerala visit, hosted by Finance Minister K.N. Balagopal. Discussions centered on correcting fiscal imbalances, with Kerala highlighting its achievements and challenges in development, urging the Commission to incentivize decentralization and fairly reward its progress.

The 16th Finance Commission, chaired by Professor Arvind Panagariya, embarked on an official visit to Kerala, warmly received by the state's Finance Minister, K.N. Balagopal. This platform served as an opportunity for Kerala to put forth its memorandum, addressing core fiscal concerns and emphasizing development priorities.

In his introductory speech, Minister Balagopal accentuated the crucial role of the Finance Commission in maintaining the federal fiscal framework. He stated that it holds a constitutionally mandated responsibility in upholding the nation's fiscal structure, particularly the federal fiscal system. Balagopal lauded Kerala's developmental feats under the 'Kerala model', while also acknowledging gaps in infrastructure development, notably in higher education and the knowledge economy.

Highlighting a downward trend in Kerala's share of central devolution from the 10th to the 15th Finance Commission, Balagopal noted the reduction from 3.88% to 1.92%. He linked this to criteria like population and income distance, which he claims unfairly penalized the state. Despite fiscal hurdles such as environmental disasters, the pandemic, and GST compensation cessation, Balagopal expressed optimism for a fairer allocation, urging the Commission to recognize Kerala's success in decentralization and social welfare.

(With inputs from agencies.)