Tamil Nadu Chief Minister MK Stalin on Tuesday, February 6, said that the Dravida Munnetra Kazhagam (DMK) will join the Kerala government's February 8 protest in New Delhi against the BJP-led Union government’s fiscal curbs on southern states.
Kerala Chief Minister Pinarayi Vijayan, on February 3, said that he along with MPs and MLAs from Kerala belonging to the Communist Party of India (Marxist) would be protesting at Delhi’s Jantar Mantar “against the Union government’s apathy towards the state, manifested through the denial of grants and the reduction of merited taxes.”
In a two–page statement, Stalin said, “I stand in full support of the government of Kerala's commitment to preserving fiscal federalism. The government of Tamil Nadu is ready to extend its cooperation in this regard and we look forward to collaborating and synchronising our efforts to address this crucial challenge.”
In the statement, Stalin also highlighted the Tamil Nadu government’s concerns against the Union government. “I want to express my sincere appreciation for your efforts in drawing the attention of the Supreme Court to the pressing issue of the Union Government's attempts to stifle state governments by exercising arbitrary and discriminatory control over their deficit financing. Although this has been happening for quite some time, the situation has rapidly deteriorated in the last few years and there is a clear consensus emerging amongst progressive state governments that such indirect control over state finances needs to be done away with.”
Stalin went on to say that “the subject of public debt for financing the public expenditure of States is within the exclusive purview of the State Legislature as per the Constitution of India. However, the Union Government has been misusing its powers under article 293 of the Constitution of India to restrict the borrowing space of the States. The prior consent from the Union Government, mandated by this section, has been converted into a restrictive tool to limit deficit financing beyond the limits prescribed by the State FRBMs. As a result, the fundamental principle of fiscal federalism envisioned by the Constitution makers is under grave threat.”
The Tamil Nadu CM also listed how the state is impacted negatively by the Union government’s policy. For the year 2023-24, the Union government has fixed the Gross State Domestic Product [GSDP] growth for calculating the net borrowing ceiling at a mere 8%, Stalin pointed out and added that this was despite the state consistently accomplishing approximately 15% nominal growth in the last two years. According to the Tamil Nadu government, this has led to a loss of Rs 6,000 crore in borrowings for the current year.
Secondly, the statement said, “The mandatory condition of funding gross losses of State DISCOMs [Distribution Companies] under the guidelines for additional borrowing for power sector reforms has forced Tamil Nadu to provide Rs 17,111 crore to TANGEDCO in the current year. This has severely constrained our fiscal space this year and is likely to affect us in the future also.” And thirdly, the statement alleges that phase 2 of expansions by the Chennai Metro Rail Limited (CMRL) was being “deliberately delayed” and that these delays had resulted in the entire debt of Rs 33,594 crore for the project being included within the state's net borrowing ceiling.
The statement further added that “The intent seems to be aimed at crippling states’ abilities to raise resources and fund crucial developmental initiatives as per their policy priorities. This needs to be resisted by like-minded progressive states.”
It also stated, “These discriminatory and unconstitutional attempts are being pushed by the Union government at a time when the fiscal autonomy of the states has already been seriously curtailed by the implementation of GST. A revenue shortfall of Rs 20,000 crore per annum is being faced by the government of Tamil Nadu in comparison to the pre-GST regime and the Union has been refusing to extend the compensation regime.
Responding to Stalin’s statement, Pinarayi Vijayan said, “Salutes to MK Stalin and DMK for extending solidarity and support for Kerala’s protest on February 8th at Delhi against the Centre’s discrimination towards states’ functioning and fiscal autonomy. This gesture boosts our efforts to stand up and resist the vicious efforts to undermine the federal principles enshrined in our Constitution. Together, let’s march forward to protect our democracy & constitutional values.”
Incidentally, the Congress-led government in Karnataka has also called for a protest regarding the Union government’s allocation of grants to the state. The Congress protest will be held at Jantar Mantar a day earlier on February 7.
Karnataka’s Deputy Chief Minister DK Shivakumar announced the protest on February 5. He said that Chief Minister Siddaramaiah, along with Cabinet ministers, MLAs, and MLCs, will participate in the protest. However, the Congress unit in Kerala has decided to skip the event on February 8.
Meanwhile, the CPI(M) has announced that the party cadre would hold agitations across Kerala in solidarity with the Delhi protest on February 8.