Kerala demands higher share of central taxes

December 31st, 2008 - 6:23 pm ICT by IANS  

Thiruvananthapuram, Dec 31 (IANS) The Kerala government Wednesday approved a draft memorandum to be submitted to the 13th Finance Commission with demands including higher share in the central taxes and hike in the open market borrowing cap. Addressing reporters after the weekly cabinet meeting here, Chief Minister V.S. Achuthanandan said the demands that they have put up include increasing the state’s share in the central taxes from the present 30.5 percent to 50 percent.

“We have also asked that the open market borrowings, which is currently pegged at 20 percent, should be increased to 50 percent of the state annual plan. Likewise, the allocation to the local self governments should be based on the population, area and development,” said Achuthanandan.

Kerala has also asked the central government not to intervene in schemes that are charted by the state government.

K.J. Joseph, faculty member at the city-based Centre for Development Studies, told IANS that the “terms of reference” of the finance commission was prepared prior to the slowdown in the economy.

“When the terms of reference were prepared, there was no economic meltdown and with the current assessment it appears the crisis will continue for at least one quarter. Therefore, the government has to re-look into the terms of reference,” he said.

“Moreover, the commission should not penalise states which have done well in social sectors by reducing the allocation to such states,” Joseph added.

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