To Accept Foreign Aid Or Not? Kerala, Central Governments At Loggerheads
India Army personnel rescue flood affected people in Ernakulam district of Kerala. (Source: PTI)

To Accept Foreign Aid Or Not? Kerala, Central Governments At Loggerheads

Even as Kerala is yet to come to terms with the devastation caused by the recent rain and floods, a shrill debate has emerged over the central government's refusal of monetary aid from foreign nations, including the UAE which offered Rs 700 crore.

The centre cited a precedent that has been in place since 2004, according to which India has refused international aid for natural disasters. The Kerala government differed, with its Finance Minister, Thomas Isaac, calling the stance a “dog in the manger” policy.

I think there are three good reasons. One, it is not against the law, it’s not against the policy. Two, India can accept aid and countries (that provide it) such as the U.S., Russia, Germany, France, Britain and U.A.E. want nothing in return; and three, is the central government in a position to provide adequate revenue to Kerala?
Thomas Isaac, Finance Minister, Kerala

Isaac, in an interaction with BloombergQuint, said that the centre must make an exception for the beleaguered state. The minister also questioned the centre’s decision to accept foreign aid as per the provisions in chapter 9 of the National Disaster Management Plan if its considered position is to refuse aid.

To Accept Foreign Aid Or Not? Kerala, Central Governments At Loggerheads

The minister detailed Kerala's plans to raise funds for immediate revenue expenditure. Isaac said that the state will increase excise duty on liquor and request the Goods and Services Tax Council to permit the state to impose cess on State GST.

Also read: Kerala Floods: State Government Seeks Rs 2,600-Crore Special Package From Centre

A cess on State GST will not have any implications on the central government or the industry. It doesn’t affect other state governments. It’s a matter between the government of Kerala and consumers of Kerala. Therefore, we’re saying allow us to (to impose the cess). There must be this minimum flexibility.
Thomas Isaac, Finance Minister, Kerala

Union Minister of State for Tourism KJ Alphons, however, defended the centre, citing the precedent. Alphons told BloombergQuint that the centre has already allotted Rs 760 crore for immediate rescue and relief activities, stressing that it will provide more funds after assessing the total damage.

Watch the discussion here:

Distinguished Fellow at Observer Research Foundation and former Ambassador Pinak Chakravarty said that it's a matter of pride that India doesn’t accept foreign aid for disaster rehabilitation. He said chapter 9 of the National Disaster Management Plan permits flexibility when it comes to accepting funds in exceptional cases.

PM Modi’s government came up with national disaster plan in which Sec. 9.2 clearly states that the government may consider, so you know the window is not closed, it remains open and it depends on the government of the day
Pinak Chakravarty, Distinguished Fellow, ORF & Former Ambassador

Watch the discussion with Pinak Chakravarty:

Also read: Kerala Flood Relief: How You Can Help Kerala Get Back On Its Feet

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.