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In a letter to the Prime Minister, Chandy said if the panel report is implemented in Kerala, it would become a backward state. The report was against the Indian constitution and the centre-state financial relations.
According to him, the report does not consider the needs of states like Kerala on the infrastructure development front.
According to the report, Kerala was placed second best after Goa among the top developed states in the country.
The 14th Finance Commission has allocated 2.4 per cent of the total central funds to Kerala.
Expressing his reservations, he said, if the Raghuram Rajan committee report was accepted this would be reduced to just 0.38 per cent. If the Center allocates Rs 1,000 crore to states, Kerala’s share would be just Rs 3.8 crore only. This will hit Kerala’s initiatives on the development front, he added.
Earlier Tamil Nadu chief minister J Jayalalithaa had raised objections and had asked the Prime Minister not to accept the report.
Kerala wants hike in loan limit
Meanwhile, the state government has asked Centre to raise the limit for taking loans from the current 3 per cent of the GDP to 4 per cent. This is in light of the serious financial crisis the state is facing due to a fall in tax revenues.
The finance department has already directed to control the expenses of various departments and instructed not to create fresh posts and also to regulate fresh appointments. Various departments had created around 15,000 new posts in last two years.
Senior officials of the finance made a presentation on the state’s current financial situation before the Cabinet on Tuesday.
The Cabinet asked the chief secretary to discuss revenue generating measures with various department heads and submit a report next week. The measures would be announced after the next Cabinet meeting, scheduled on October 10.
At his post Cabinet briefing Chandy said: “We wish to increase revenues without taxing the people. There will be no cut in the Plan expenditure. But certain measures will have to be taken to cut non-plan expenditure.
The United Democratic Front government after coming to power, had created 15,000 posts involving a financial commitment of Rs 460 crore. However, there will not be a ban on recruitment.”
It was learned that most of the ministers had objected to measures to cut down expenses, especially a ban on recruitment.
Under the current stipulations of the Centre, Kerala can avail of Rs 12,000 crore as public debt in this financial year. The state had already taken Rs 6,200 crore.
The tax collection dropped 2 per cent during August when compared with July. Kerala has to maintain 16-17 per cent growth in commercial tax collection during this financial year for meeting the budgetary commitments, but the actual growth was at 11 per cent only.
The state government has to appoint a new Pay Commission in line with the Centre as the pay revision is due in next July. It is likely that the government will appoint a Commission before the announcement of the next Parliament elections due next year.
