The annual pal of Kerala was finalized at Rs.3250 crores .This is an increase of Rs.150 crores over the approved outlay for 1998-1999.
The financing of the Plan includes state’s own resources of Rs.2346 crores and central assistance of the rest. On request from Kerala chief minister the deputy chairman sanctioned a special assistance of Rs53 for the Kerala Information Network for local bodies, housing for weaker sections and setting up an Institute of Information Technology. This assistance will be included into the central share. Unlike the previous year additional amounts will be forthcoming from Accelerated Irrigation Benefit Scheme for minor irrigation projects also.

In the meeting, Kerala chief minister pointed out that financial constraints faced by the state as a result of the over all economic down turn in the economy. All alone the percapita outlay of Kerala according to Nayanar has remained consistently below the national average except in the first one or two five year plan periods.The percapita plan outlay of Kerala for the ninth five year plan is only Rs.5118 as against the all India average of 8994 reflecting a gap of 43percent. To reduce this gap, and to accelerate developmental process in the state, the chief minister requested special assistance form the center.

The ninth of five year plan outlay of the state had been fixed at Rs.16100 crores in 1996-97 prices. The plan expenditure in the first two years of the ninth plan is likely to be Rs.5300 crores leaving a balance of rs.10,800 crores to be achieved in the next three years. On this basis Kerala requires a minimum plan size of 3700 crores at current price, which is what has been agreed upon at the meeting.

With regard to resources mobilization, the capacity of the state to raise tax revenues depend largely on the initiatives to be taken by the center for brining appropriate legislation's. The taxation of consignment transfers has been hanging fire for long, Nayanar said in the meeting. Similarly ,taxation of advertisement need to be legislated upon to enable the states to mobilise the much needed revenue for investment.He also pointed out the lethargy on the part of the central government to bring in amendments to the constitution for implementing the recommendations of the 10 the finance commission.

Nayanar was criticized some of the decisions of the central government which adversely affect the resource mobilization efforts of state government. The central government has reduced the rate of interest on small savings, making them relatively less attractive for investors. Similarly, the central

government has decided to ban the conduct of state lotteries. The central government has through the current year’s budget,re introduced the surcharge of income tax to circumvent the sharing of tax proceeds with the states. Nayanar requested Pant to use his good office to change such retrograde policies.

Kerala chief minister requested that Kerala should be considered a special case while making allocation of central assistance. Given the low level of economic development and the weak resource availability for the state plan , the chief minister reiterated his demand to treat Kerala on par with special cateogry states, raising the grant component to 90 percent .Kerala deserves such a consideration in view of the fact that around 30 percent of the state budget is earmarked just for two sectors of national importance, viz education and health.

He pointed out that disquieting feature of the manner of devolution of central funds. A state like Kerala get penalized for having done well in social sectors and going for ahead in the achievement of national goals in basis minimum services such as literacy including female literacy, life expectancy and family planning. He requested the planning commission to devise some appropriate mechanism to ensure a reasonable share for the state. He in his note deplored the export -import policy announcement which will seriously affect the economy of the state.

Kerala also requested a special assistance grant for the plan implementation of the local bodies .the ninth plan document has appreciated the initiaivte in Kerala to decentralize the planning process and the steps taken for ensuring participatory planning and development .As part of the comprehensive plan to solve the problems at the grass roots, the state government had identified two thrust areas,viz, housing for weaker sections and providing draining water. The government had decided to provide houses for all , estimating that 5 lakhs houses will have to be constructed. This task is to be completed within two years. Similarly,even though Kerala is known for its rich water resources,several parts of the state face acute drinking water shortage during the summer. The state government has decided to implement a comprehensive scheme for solving this problem within the next two years. Since these activities will be taken up at the local body level, the chief minister requested special assistance for decentralized planning which will go a long way in solving these vital problems within the stipulated time frame.