Pinarayi Vijayan hoists tricolour on the occassion of India's 75th Independence Day in Trivandrum on Monday.

Ashraf Padanna, Correspondent

Kerala chief minister Pinarayi Vijayan on Monday said that India needed a strong Centre and powerful states for the country’s progress.

"Federalism is the foundation of the Constitution as well as the basis of our country's existence,” he said in his Independence Day address.

"We should realise that the constitutional values of federalism and secularism, and the themes of equality and independence, were also the dreams of the freedom fighters.”

"It’s this perspective that’s imparted to us by renaissance values and the independence movement, that helped us defeat communal violence and polarisation,” added.

"We can realise the freedom fighters’ dream as a country that incorporates its rich diversity only by retaining the federal principles.”

The cash-strapped southern state had recently accused the federal government of "cutting” its financial resources of Rs 230 billion.

Vijayan said that only if the federal government makes available necessary funds for the development of the states the people could enjoy the benefits.

He said investments were needed to end extreme poverty and lack of housing that were affecting a large section of people and the state’s focus is on solving them.

"Freedom becomes meaningful only when everyone is liberated from the shackles of inequality and injustice,” he said.

Flagging the resource crunch, the state’s finance minister had recently accused the federal government of putting it in a grave financial crisis.

The state fell into a deep financial crisis after the federal government ended relaxation in borrowing limits during the Covid pandemic and reduced revenue deficit grants.

The grants allotted to the states after migrating to the goods and services tax (GST) ended last month.
It also put its foot down on extra-budgetary borrowings through Kerala Infrastructure Investment Fund Board as almost the entire tax revenues go into salaries, pensions and debt servicing.

The industrially laggard state’s public debt has more than doubled since the Left Democratic Front came to power in 2016 and it reached Rs 3,322 billion last fiscal year.

In a letter, Balagopal requested the finance minister Nirmala Sitaraman to exclude balances in the public account and borrowings by the state-run entities like KIIFB while determining their borrowing limits.

The state also borrows through entities like the Kerala Social Security Pension Limited and Kerala State Financial Enterprises.

The federal government has reduced the revenue deficit grant of the state to around Rs 700 billion for the current fiscal year.

The end of the GST compensation further reduced its receivables by Rs 120 billion and cut its borrowing limit by Rs 40 billion on account of extrabudgetary debts.

Sitaraman rejected his claim that liabilities of state instrumentalities, like statutory bodies and companies, do not come within the definition of state debt.

He also argued that this clearly violates the Constitution, Balagopal said, highlighting that the Centre did not do so in case of its own borrowing.

He admitted that the state was in a "grave financial crisis” currently and urged the federal government to refrain from the "constitutionally untenable attempt” to control the financial operations of the state government agencies.

"Under the Constitution, these are matters that exclusively remain in the domain of the state government,” he said.

"Unless the realities faced by the state, particularly given the fact that the state is struggling to emerge from the economic debilitation wrought by the COVID-19 pandemic, are recognised by the Union government, the safety of the socio-economic security system that the state has worked so hard to build over the last several decades will be in jeopardy.”