Kerala Finance Minister Thomas Isaac accused the centre of trying to "throttle" the state through the Union budget tabled in parliament on Saturday, and said that it could be detrimental to the country's economy at a time when it is already under pressure.
"The budget uses bombastic words but shows no increase in expenditure. Look at agriculture expenditure. The allocation is almost the same. You take the employment guarantee scheme. It is around Rs 10,000 crore lower than what it is in the current year expenditure," he told NDTV.
Mr Isaac said that a minimal increase in government expenditure would make things difficult for the economy if things take a turn for the worse. "Government expenditure is increasing by only 9 per cent. They assume a rate of growth for economy at 10 per cent, which means that their share of government expenditure is going to decline in recessionary conditions. This is crazy, to say the least. And very dangerous too because things may soon get out of hand," he said.
The state Finance Minister said that the world was yet to gauge the economic fallout of the coronavirus epidemic. "If it is not controlled in a week's time, it is going to affect world trade in a big way. This may be the Lehman point of our decade. There can be very serious international downturn and here is a budget that seeks to squeeze expenditure."
While Kerala's share of tax has reduced, it is yet to receive Goods and Services Tax compensation of around Rs 3,500 crore from the centre.
Tearing into the demographic performance weights added by the Fifteenth Finance Commission, Mr Isaac said: "Kerala, Telangana and Andhra have been severely hit. But historically, Kerala's condition is going to be terrible with the lowest-ever share in central tax at 1.9 per cent. There was a point when Kerala used to be at 3.5% of the total share."
"The centre has robbed the Reserve Bank of India of Rs 1.9 lakh crore, and if you add that, its fiscal deficit comes up to almost 5 per cent. But states such as Kerala, which has been battling the aftermath of the floods, are being forced to stay at 3 per cent. But we have come to believe that Kerala will have to go ahead despite (roadblocks placed by) the central government," Mr Isaac said.
Soon after the budget, Mr Isaac had termed the budget as Union Finance Minister Nirmala Sitharaman's "war cry" against Kerala. "They are throttling Kerala. You don't give us flood damage relief, you don't permit additional borrowing for rebuilding, you cut our contemporary borrowing, you reduce share of taxes for the state drastically. But Kerala will continue on its alternative path to development and politics too. We have the people of Kerala," he told NDTV.