Kerala finances seriously hit by 'disproportionate' allocation by earlier Finance Commissions: UDF

Thiruvananthapuram, Dec 10 (PTI) The Congress-led UDF on Tuesday told the 16th Finance Commission (FC) that finances of Kerala have taken a serious hit due to the disproportionate vertical and horizontal allocation of resources to the state by the previous commissions.

Leader of Opposition in the state assembly V D Satheesan said, in a statement, that the UDF sought a favourable decision from the 16th Finance Commission (FC) "to resolve the existing disparity in devolution".

"The tax devolution criteria put forth by the FCs over the years have severely impacted the southern state, including Kerala. Sadly, the devolution to Kerala has shown a decreasing trend over the years," Satheesan said in the statement.

The UDF submitted a list of recommendations on the criteria for increasing the states' share in central taxes and allocation of grants to Kerala by the 16th FC, which is in Kerala on a three-day visit, he said.

The opposition recommended increasing from 41 per cent to 50 per cent the share of states in central taxes, reducing to 25 per cent from 45 per cent the weightage of per capita income distance -- a key criterion for devolution -- and making the cess and surcharge collected by the Centre a part of the divisible pool of tax revenue.

Additionally, it recommended reducing the weightage of population, as per 2011 census, to 10 per cent from the 15 per cent in the 15th FC and increase the weightage of demographic performance to 25 per cent from 12.5 per cent.

The opposition said that by giving more weightage to population, states like Kerala that exercised prudent population control as per central government policy have had to suffer as they were penalised for it rather than being incentivised for it.

Besides these, the UDF said that Kerala was a natural disaster prone state on account of various factors, including climate change, and therefore, the existing 'forest and ecology' criteria be modified to include environmental fragility and disaster vulnerable population.

"The weightage of the forest, environmental fragility and disaster vulnerable population criteria is suggested to be increased to 20 per cent from 10 per cent," the opposition recommended according to Satheesan's statement.

The opposition also recommended that the FC take into account the real geographic area, including the sloppy terrain, while calculating the tax devolution.

Furthermore, the UDF recommended that devolution of funds to local self government and special component plans for the marginalised sections including the SC/ST, fishermen and artisans among others should be encouraged to ensure equitable growth of the population, Satheesan said in the statement.

Regarding allocation of grants, the UDF recommended that the revenue deficit compensation granted by the 15th FC be continued in the 16th FC as well and to increase the sector specific grants of Rs 1.3 lakh crore given to eight sectors by the 15th FC.

In addition to these, the opposition also recommended a considerable increase of the grants to local bodies from the Rs 4.36 lakh crore allocated as per the 15th FC.

"States that have taken adequate measures to transfer Fund, Functions and Functionaries (3F) should be awarded with more allocations.

"The United Democratic Front (UDF) beseech for a favourable decision on these points put forth before the 16th Finance Commission," the opposition said in its recommendations.

Members of the 16th Finance Commission, led by former NITI Aayog vice chairman Arvind Panagariya, are in Kerala for a three-day visit, as part of holding consultations for preparing its report.

The Finance Commission determines the constitutional financial support that states receive from the central government for a five-year period. PTI HMP HMP ROH