The finance minister of Kerala, K N Balagopal, expressed concern over the shift in fiscal federal relations in India from cooperative federalism to subordinated or coercive federalism. He emphasized the need to recognize the role of state governments in addressing development challenges and nation-building. Balagopal highlighted that Kerala’s share in the divisible pool has significantly decreased over the years, affecting the state’s ability to fund essential services. He called for a fairer distribution of funds, with at least 50% going to states and a cap on cess and surcharges. Balagopal also pointed out flaws in the current criteria for horizontal devolution, which penalizes high-income states despite their declining tax revenues.
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