Understanding the Allocation of Funds in Response to the Pandemic
The allocation of funds during a public health crisis like the ongoing Covid-19 pandemic remains a contentious issue, with distinct economic and political considerations. In a recent development, the central government of India appeared to offer Kerala a lesser allocation despite reporting significantly higher Covid-19 cases compared to other states. This article delves into the reasons behind this allocation and the critical factors that influenced the decision.
Context and Recommendations
According to the recommendations of the 15th Finance Commission, Rs 314 crore was allocated to Kerala as part of the central government's contribution to the State Disaster Response Fund (SDRF). Of this, Kerala had already received Rs 157 crore, which is half of the amount owed to the state. The allocation is based on the population of the state, and no state with fewer Covid-19 cases has received more funds than Kerala, considering the total states of similar size.
It's important to note that while Kerala faced a severe Covid-19 outbreak early on, other states such as Maharashtra, Delhi, Gujarat, Madhya Pradesh, Rajasthan, and Tamil Nadu have since seen a surge in cases. The comparison of the current situation highlights that the severity of the pandemic can vary significantly across different regions.
Economic and Fiscal Constraints
The allocation of funds to states is influenced by several economic and fiscal factors. In times of lockdown and reduced economic activity, the central government has to manage its resources efficiently. As Finance Minister Nirmala Sitharaman mentioned, the central government had to allocate the available limited resources for the states after due diligence. The reduction in GST revenue and the decline in import duties due to reduced oil prices and lower excise duties have all contributed to the constraints.
The central government also has to manage its fiscal deficit, a key economic indicator. It was decided that states should not exceed a 3% fiscal deficit as a percentage of their GDP, but the Kerala government has sought to increase this to 4%. This request reflects the government's need for additional financial support to combat the economic impact of Covid-19.
Policy and Political Considerations
The allocation of funds is not just an economic decision but also has political undertones. The Bharatiya Janata Party (BJP) has promised to build two new AIIMS hospitals in Bihar, reflecting its commitment to healthcare infrastructure. However, the allocation to states like Kerala, affected by the pandemic, is a critical aspect that has drawn attention.
The delay in releasing the pending Shared of GST to contributing states has added to the frustration. The central government's decision to prioritize fiscal prudence has led to a slower release of funds, which is not well-received, especially during a crisis.
Conclusion
The allocation of funds to Kerala and other states during the pandemic is a complex issue that involves balancing economic constraints, fiscal prudence, and political commitments. While Kerala's case highlights the need for adequate financial support, the larger picture shows a careful distribution of resources aimed at stabilizing the overall economy. The central government's approach aims to ensure that funds are allocated in a manner that maximizes their impact on the overall health and economic well-being of the country.
As the situation continues to evolve, the central government's efforts to manage the allocation of funds will remain under scrutiny. Addressing the concerns of states like Kerala with targeted support while maintaining fiscal discipline remains a delicate balance. The focus should be on sustainable economic recovery and robust public health measures to ensure a brighter future for all.