The Kerala government will need at least Rs 21,000 crore to reconstruct basic infrastructure following the unprecedented floods that have claimed at least 216 lives since August 8, and will look at various options to meet the burden, including approaching the GST Council to allow the state to levy a cess, State Finance Minister Thomas Isaac told The Indian Express.
The state will also approach the central government, multilateral agencies and soft-loan providers, Isaac said. “The social cost is unimaginable, the trauma is heavy,” he said.
The Finance Minister, who is overseeing relief work in Alappuzha district, said the state will also have to make “corrections in the development trajectory” in the future and “focus on the toll that development takes on the environment”.
Isaac said he would approach the GST Council for permission on introducing a cess, given the new rules under the one-tax regime. Earlier, there was the National Calamity Contingency Fund (NCCF), which was introduced after the Gujarat earthquake of 2001, he said. But the NCCF has since been merged with National Disaster Response Fund, he said.
Asked if the state would ask the Centre to levy a cess for mobilising financial resources, Isaac said: “That hope is gone because of the GST. I will have to approach the GST Council to permit us to levy a cess under GST so that additional resources can be collected.”
Pointing out that the state government will now have to place its “full focus” on reconstruction, the Finance Minister said: “The first thing we will have to take up is the reconstruction of roads, which have suffered extensive damage. We are going to do it immediately. The cost would easily be Rs 10,000 crore. Secondly, it would be the construction of houses — around 1 lakh houses have been severely damaged and the state government will have to spend Rs 4 lakh on each. It’s a huge amount of money. In Kerala, it’s not possible to do a hotchpotch job. The restoration of electricity and water connection itself would cost Rs 2,000 crore.”
Isaac, who is a senior CPI(M) MLA, said the second major component of the financial cost would be the completion of a “package for Kuttanad” in Alappuzha, which is one of the worst-affected areas. “This will require Rs 2,000 crore and the afforestation programme would cost another Rs 3,000 crore. The kind of flash floods Kerala has just faced has proved that the absorption capacity of river basins and land has to be restored. We have to put in efforts for that, too,” he said.
According to Isaac, the central government will have to come up with “some unconventional response” to release funds under various schemes. For instance, Isaac said, the state will seek changes in rules for the Centre to release funds under the Pradhan Mantri Awas Yojana for pucca houses, too. “They will have to tweak some rules,” he said.
“The state expects multilateral agencies to assist, too. This is a perfect example of the impact of climate change and deterioration in ecological balance. A lot of people have shown interest. I hope the World Bank, UN agencies and other soft lending firms will be sympathetic to the state’s requirement now,” Isaac said.
The state will also have to rely on “some innovative ways” and “outside resources” for construction material, the Finance Minister said. “However, the construction process will create employment opportunities which, in turn, will accelerate growth,” Isaac said.