Kerala finance minister Thomas Isaac said, “Kerala is now dependent on donations; it’s not a healthy federal system... There is no system in place for resource mobilisation even in times of crisis.”(Sonu Mehta/HT PHOTO)
Kerala finance minister Thomas Isaac said, “Kerala is now dependent on donations; it’s not a healthy federal system... There is no system in place for resource mobilisation even in times of crisis.”(Sonu Mehta/HT PHOTO)

North India’s backwardness ultimately a political question: Kerala minister Thomas Isaac

South and western India had a ryotwari system, while north India had a zamindari system — these are historical headaches.
By Manoj Ramachandran | Hindustan Times, New Delhi
UPDATED ON SEP 23, 2018 08:16 AM IST

One of the strongest voices advocating greater federalism, Kerala’s finance minister Thomas Isaac speaks to Manoj Ramachandran on the course ahead for Kerala and how the Communist Party of India(Marxist) looks at the 2019 Lok Sabha polls.

In 1996, a meeting of chief ministers in Hyderabad issued a statement titled, ‘Federalism Without a Centre’. Do you think federalism without a Centre is possible in India?

A strong Centre is mandatory given India’s diversity. But the system we have is quasi-federal. Given the nature of the times when our Constitution was framed, it has been biased towards the Union. This has become dramatically pronounced during the recent floods in Kerala. State governments can’t borrow because of a limit in place.

Our taxation powers have been virtually taken away due to GST. We can’t seek foreign aid as it’s against the government policy and the Centre is not very generous in giving grants. Kerala is now dependent on donations; it’s not a healthy federal system... There is no system in place for resource mobilisation even in times of crisis. We need course correction.

What are the institutional mechanisms available to address Centre-state ties?

Firstly, allow the Finance Commission to function independently. Don’t micromanage it by fixing terms of reference which tie their hands. The revenue deficit grant is a Constitutional provision, the terms of reference wants to do away with it. The Finance Commission can’t decide on what are populist measures. Secondly, GST has to be made flexible. States should be allowed to tweak its SGST component. We should decide on how federal flexibility can be brought into the GST system. Thirdly, the National Development Council and the Industry Council need to be rejuvenated. We were critical of the Planning Commission, which has made way for the Niti Aayog, which in turn has no teeth.

Demographic transition coupled with economic growth has put southern states much ahead on the development curve. How can the north match up to this?

These differences have been historical. The nature of metropolitan growth has a lot to do with regional development. South and western India had a ryotwari system, while north India had a zamindari system — these are historical headaches. But 70 years is enough time to overcome disparities. However, North India has failed in providing basic healthcare, education and conditions to lead life with human dignity. This is the biggest lesson Kerala has given, Tamil Nadu is following this path now, and Andhra Pradesh and Telangana also seem poised to follow this model. Redistributive politics and policies have been absent in north India. The backwardness of the region is ultimately a political question. This is the challenge that the North faces.

Despite their backwardness, north India has a huge amount of unspent capital deposited in Government of India securities. Over Rs 1,50,000-crore of different states’ money is lying in Government of India’s 14-day securities, earning 3-4% interest. Why keep it there? Spend it on education and healthcare. Kerala with 3% of the country’s population accounts for 50% of claims under the Rashtriya Swasthya Bima Yojana (RSBY).

How much more will Kerala need to bail out of the present crisis?

Kerala now needs Rs 6,000 crores for repair and compensation and Rs 25,000 crores in capital expenditure to rebuild. Like all states, we are allowed to borrow 3% of our GST bill. What is happening in Kerala now is an economic crisis worse than 2009. Our ties with the UAE run deep. We want the right to borrow for reconstruction work. We have begun crowd-funding in developmental work.

The CPI(M)-led Left Democratic Front (LDF) government’s work has attracted a lot of criticism. Will this prove detrimental to your chances in the 2019 Lok Sabha elections?

Criticism is an integral part of a democracy. But on the contrary, the work done by the state government will ensure a win. The overwhelming impression within and outside Kerala is one of positivity towards the state government. The calamity has been dealt with most effectively... The government’s prestige is at its highest in its current tenure.

The CPI(M) and Congress have earlier come together to form political dispensations. Do you think the need is more in light of the renewed focus by the BJP to make inroads into southern states?

The BJP’s rule in Delhi has definitely given them respectability but they have been able to make inroads only in Karnataka. With the Congress and JD(S) coming together, the BJP stands no chance. It is going to be a near washout for the BJP in the south. The BJP’s political outreach is inimical to the socio-political commentary of the south. Social reformation and renaissance has put the southern narrative on a different level. We believe in the ideal propagated by Sri Narayana Guru, who said, “Caste and religion don’t matter if one is a good human being.” A north Indian party that says one has to be a Hindu to be a good human being just doesn’t find a place in our narrative. The BJP stands isolated in South India and will become a liability to any party who will associate themselves with them.

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