Issac flays tight-fisted central govt for stifling Kerala's rebuilding efforts

Centre stopping flood-hit Kerala from taking loans for rebuilding, says finance minister Isaac
Thomas Isaac

Thiruvananthapuram: Kerala Finance Minister Thomas Isaac has slammed the central government’s stance as his government struggles to rebuild the state in the wake of the devastating floods last year.

The Centre is stifling the state by denying permission for more loans and cutting its tax share, Issac fumed.

Several agencies have promised Rs 7,000 crore of the Rs 30,000 crore required to rebuild state, Isaac argued. But Kerala's borrowing limit has not been raised. Moreover, whatever loan is extended for flood relief would be adjusted to loans to be taken for other purposes, he explained.

Another setback is the central government decision to divert a portion of tax shares for states towards the defence sector.

The move to prioritise defense spending over outlays for states points to a plan to cut tax shares meant for states. The BJP is punishing states after winning another term, Issac alleged by citing the victory of that party in the recent general election.

The Centre’s move will be challenged legally, Issac told Manorama News.

Incidentally, Kerala Chief Minister Pinarayi Vijayan and Union minister of state V Muralidharan, MP, earlier had a war of words over flood relief from the centre.

Muralidharan had said Kerala already had funds allowed last year.

Considering the state government's need for funds and the centre's reluctance to ease borrowing norms, the latter did allow Kerala government to collect an additional one per cent cess over the Goods and service Tax (GST) charged on items sold.

From August 1, Kerala government has imposed a 1 per cent cess on the sale of articles to garner Rs 1,200 crore for rebuilding flood-ravaged rural roads. The cess, which would be in effect for two years from August 1, 2019, would be applicable for 928 commodities with GST rates of 12 per cent, 18 per cent and 28 per cent. However, it would not be applicable for essential items such as rice, salt, sugar, fruits and vegetables with a GST rate of 0 per cent and 5 per cent. There would not be any flood cess for petrol, diesel, alcohol and land sale that are outside the purview of the GST.

In the wake of the 2018 floods, the Centre had provided Rs 2,904 crore for the state. That calamity, which began after heavy rains at the end of May last year and continued till mid-August, had claimed 483 lives, and at the height of the deluge over 14.50 lakh people were displaced taking shelter in over 3,000 relief camps. Soon after the floods, the Kerala government had mobilised about Rs 4,016 crore on its own after the government urged public to contribute to the Chief Minister's Distress Relief Fund.