Thiruvananthapuram: Former finance minister K N Balagopal has stated that Kerala had anticipated a substantial Revenue Deficit Grant (RDG) from the 16th Finance Commission, and the denial of this grant has severely impacted the state's financial calculations.
Expected Grant Amount
Balagopal explained that if grants had been allocated following the pattern of previous finance commissions, Kerala should have received more than Rs 40,000 crore as RDG over a five-year period. He noted that the 15th Finance Commission had allocated approximately Rs 4.5 lakh crore as RDG to various states. Adjusting for inflation, the 16th Finance Commission should have distributed at least Rs 6 lakh crore among states under the same head.
Budget Planning Disrupted
According to Balagopal, the state government had prepared its budget, and the legislative assembly approved it, factoring in the expected grant. The state estimated Rs 14,138 crore as the first instalment for the current financial year. However, the Centre did not provide any RDG this time, he said.
This decision has disrupted the financial planning of several states. Referring to Himachal Pradesh, Balagopal highlighted that the Congress-led state passed a resolution in its assembly seeking restoration of the RDG. The Himachal Pradesh chief minister traveled to Delhi to protest and warned that the state might have to reduce employee salaries if the grant was not restored.
Call for Action
Balagopal urged Kerala to treat the issue seriously. He pointed out that the action taken report on the recommendations of the 16th Finance Commission has not yet received final approval from the Centre, leaving a possibility of securing the RDG. He urged the state government to initiate discussions with the Centre to obtain the grant and expressed hope that the state budget would contain strong measures aimed at securing the RDG for Kerala.
