Even after the Centre accepting the Union Finance Commission’s revenue deficit grant award of ₹74,000 crore, the State government is concerned over the time and quantum of funds to be devolved over the years.
The concern is largely based on the Centre’s practice of slashing the grant progressively in the previous years. Citing financial constraints, if the Centre defers the allocation, it would rattle the State’s finances.
The 15th Union Finance Commission, in its interim report, had awarded ₹74,000 crore for the grant to States, but Union Finance Minister Nirmala Sitaraman in her budget speech had said that the Centre would provide a substantial share in this score and it was whittled down to ₹30,000 crore.
Political duress
Subsequently, under political duress, mainly from the non-BJP ruled States led by Kerala, the Centre accepted the award in toto.
Of the ₹ 74,000 crore awarded by the commission, Kerala ,Tamil Nadu, Andhra Pradesh and West Bengal were expected to share about ₹38,000 crore and the remaining component was to be apportioned among the North-Eastern States.
The grant is awarded to States that bear the burden of persistent deficit for bridging the revenue and expenditure gap. Kerala had been looking forward for a support in this regard since it is eligible for a sum of ₹14,000 crore.
Rise in speculation
Rumours were rife that the 15th UFC would do away with the grant, but it was found to be bountiful in its award. Ms. Sitaraman’s announcement that it would give a substantive sum as grant had given rise to speculation.
Finance Minister T.M. Thomas Isaac had voiced concern against the bid to slash the grant. And that too at a time when the revenue collections have dipped, the Centre had refused to heed the State’s demand for raising the annual borrowing limit and also reduced the devolution from its divisive pool.
During the past five years too the devolution of funds as revenue deficit grant was inconsistent. After awarding ₹5,000 crore in the first year, it came down to ₹4,000 crore and tapered down the years.
Negative side
Kerala like other States that had registered remarkable progress in health and family planning sectors is being forced to pay heavily for the dividends it gained in containing the population growth.
The UFC decision to go by the 2011 census report, wishing away the assurance given earlier to fix the awards on the basis of the 1971 census in view of the State’s efforts in population control, too is feared to take a heavy toll on the apportioning of funds from the Centre.
