FMs' conclave: Opposition-ruled states to build pressure for fair share in 16th Finance Commission

THIRUVANANTHAPURAM: The issue of significant cuts in the Central financial allocations to some states due to their progress in certain areas will be a major highlight when Finance Ministers from four South Indian states and Punjab meet on September 12, sources said on Monday.

Five opposition-ruled states -- Kerala (Left), Karnataka and Telangana (Congress), Tamil Nadu (DMK), and Punjab (AAP) -- are holding a conclave to seek a fair deal for their fiscal needs in the upcoming 16th Finance Commission.

The Finance Ministers' conclave is also seen as a bid to build pressure on the BJP-ruled Centre to address their grievances regarding resource allocations, given the commencement of the 16th Finance Commission's operations, chaired by Dr A Arvind Panagariya.

A government source said Kerala and some other states have faced significant cuts in Central financial allocations, as recommended by previous Finance Commissions.

"The 10th Finance Commission recommended a 3.875 per cent allocation for Kerala, whereas the 15th Finance Commission recommended only 1.92 per cent. In contrast, Uttar Pradesh received 17.8 per cent as per the 10th Finance Commission and 17.9 per cent as per the 15th Finance Commission," the source told PTI.

The source added that many states, including Kerala, have suffered significant financial losses due to the 15th Finance Commission's recommendations.

Kerala Finance Minister K N Balagopal has always been a vocal critic of the alleged bias in the Centre's resource allocations to states, which, according to him, has resulted in severe resource limitations for some states, including Kerala.

"To address this, it is essential to reform the financial relations between the Centre and states in favour of the latter. This is the key to empowering cooperative federalism. The Kerala government has pledged to take the lead in building consensus among states to achieve this goal," he said.

Officials said the 16th Finance Commission has initiated talks with the states, and Kerala sees this as a vital opportunity to stress the importance of reforming the financial relationship between the Centre and states.

A united front among states on financial issues is now more crucial than ever, they said, adding the September 12 conference is being organised to support this initiative.

Balagopal has said Kerala is taking the initiative to host this conference at a critical juncture when economic federalism in India is under severe strain.

"The primary goal of the meeting is to brainstorm and articulate the developmental and financial challenges faced by states, with a view to presenting them before the 16th Finance Commission," he has told media.

According to the Left government in Kerala, robust Centre-state relationship hinges on the financial sustainability of states and a key component of this is the fair share of financial resources that states should receive from the Union Government.

However, the Union government has taken a completely different stance, the government has said.

The state government alleges that the Union government's unfair financial allocation methods result in states bearing a disproportionate 62.4 per cent of the country's total public expenditure.

The conclave will be inaugurated by Kerala Chief Minister Pinarayi Vijayan.

Besides Balagopal, Telangana Deputy Chief Minister and Finance Minister Bhatti Vikramarka Mallu, Karnataka Revenue Minister Krishna Byre Gowda, Punjab Finance Minister Harpal Singh Cheema, Tamil Nadu Finance Minister Thangam Thennarasu and Leader of the Opposition in the Kerala Assembly V D Satheesan are also expected to take part in the conclave.

Additionally, officials including finance secretaries of all the five states and several subject-related experts, like former Economic Advisor to the Central Government Arvind Subramanian, will also attend, the government has said.