April 04, 2020 10:50 IST

'The Centre doesn't think of the states. We have to manage the crisis.'

IMAGE: Prime Minister Narendra Damodardas Modi holds a meeting on coronavirus via video-conferencing with state chief ministers, April 2, 2020. Photograph: ANI Photo

Kerala, with other states, is planning to drag the Centre to the Supreme Court for not paying its GST dues worth Rs 40,000 crore, with another Rs 40,000 crore of integrated goods and services tax pending.

Kerala Finance Minister Thomas Isaac tells Dilasha Seth why the state could face a severe financial crisis if the Centre does not increase the borrowing limit by 1% of GDP.

How do you assess the Centre's response to fight coronavirus? Is the Rs 1.7 trillion relief sufficient?

The relief offered is inadequate, meagre, and disappointing.

While the Centre has locked down the nation and a majority of people have lost employment, it has offered them a meagre Rs 500 a month.

Of course, there is free, additional ration, but that is just not sufficient if you look at the kind of relief being given all over the world.

The UK is paying 80 per cent salary to the self-employed and workers.

What are the areas the Centre needs to intervene in or increase allocation to?

This was an opportune moment to institutionalise social security programmes.

First, it would be good to have a universal pension scheme for the unorganised sector and not just the people below the poverty line.

A pension scheme of Rs 1,000 or Rs 2,000 should be in place.

Kerala gives Rs 1,200 to 5.5 million people. Of that the Centre's share is only Rs 6.8 lakh at Rs 200 per person. Something like this will be enduring, and provide immediate support to a vast majority of households.

The MGNREGA (Mahatma Gandhi National Rural Employment Act) wage increase is doubtful because only people who get 100 days employment will get that. During COVID-19 there will be no MGNREGA programme.

The amount should be transferred to every MGNREGA account with a monthly average of payment made last year. An advance may be paid for the work they will do later. It will be a support for them in the current scenario and not burden the exchequer.

The National Health Mission allocation should also double. These are essential things that the Centre should think of.

Kerala has announced a COVID-19 package of Rs 20,000 crore. That includes direct payouts and free foodgrains. Amid the constrained state finances and dues pending from the Centre, how much will you borrow from the market?

The Centre doesn't think of the states. We have to manage the crisis. So at least, it should pay what is due to us, like the GST compensation cess.

It should permit states to borrow an additional 1 per cent of GDP. We have permitted borrowing Rs 27,000 crore for next year and wish to borrow half that upfront, and spend it in April and May during the shutdown.

Are you hopeful the Centre will increase your borrowing limit as the economy seems set to nosedive in 2020-21?

This is a big risk we are taking, and it can mean serious trouble later, but let us hope that good sense will prevail as the world is changing very fast.

Your national income will be in negative territory in 2020-2021. World growth is also going to be negative.

The US, being so conservative, has announced a $2 trillion package. Other countries are also spending.

Why is the Indian government being so stingy about spending? This is the time to borrow and spend.

I am certain the Centre will be forced by circumstances to change its position.

Where are your discussions with the Centre headed on the pending GST dues?

Kerala is to get Rs 3,000 crore. It is big money for a state like Kerala.

The tragedy is that Centre has unlawfully kept Rs 40,000 crore due to states in compensation with them.

The Centre has kept integrated GST (IGST) in the Consolidated Fund of India instead of distributing the money to the states. It has given us only 42 per cent, which comes as devolution, whereas 50 per cent IGST should have come to the states.

We lost around Rs 40,000 crore.

This is an illegal thing the Centre has done.