Kerala will host a conclave of five opposition-ruled states - from South India and Punjab from the North - to discuss how to ensure their fiscal needs are addressed in the upcoming 16th Finance Commission, state Finance Minister K. N. Balagopal said on Thursday.

Besides the Left-ruled Kerala and AAP-governed Punjab, the states that will take part in the conclave are Tamil Nadu (DMK) and the Congress-ruled states of Karnataka and Telangana.

The move by the Left government is seen as an effort to bring together the opposition-ruled states to strengthen their bargaining position with the BJP-ruled Centre. Last year, the state filed a suit in the Supreme Court against the Centre for imposing limits on its borrowing capacity.

Balagopal said that the conclave, which will be inaugurated by Kerala Chief Minister Pinarayi Vijayan on September 12, aims to 'protect and strengthen' the cooperative and fiscal federalism of the country.

Besides himself, Telangana Deputy Chief Minister and Finance Minister Bhatti Vikramarka Mallu, Karnataka Revenue Minister Krishna Byre Gowda, Punjab Finance Minister Harpal Singh Cheema, Tamil Nadu Finance Minister Thangam Thennarasu and Leader of the Opposition in the Kerala Assembly V. D. Satheesan will also take part in the conclave, Balagopal said.

Additionally, officials including finance secretaries of all the five states and several subject matter-related experts, like former Economic Advisor to the Central Government Arvind Subramanian, will also attend, the minister said.

He further said the conclave was being hosted by Kerala at a time fiscal federalism in the country was under challenge to a great extent.

"The main objective of the conference is to conceptualise the developmental and financial issues being faced by the states and present them before the 16th Finance Commission.

"A healthy Centre-State relationship requires fiscal stability of the states," Balagopal said.

The minister contended that the Union government was taking a completely different stand by adopting "unfair methods of distribution of funds" to the states.

He also contended that a huge amount of revenue collected by the Centre from the states as cess and surcharge is not put in the divisive pool and therefore, the states do not get a share of that amount which is to the tune of several lakhs of crores of rupees.

In 2011-12, the share of cess and surcharge in Central government revenue was 9.4 per cent and by 2022-23, it had gone up to 22.8 per cent, he said.

As a result, the states get only 29.6 per cent of the Centre's revenue as against the recommendation of 41 per cent by the 15th Finance Commission, Balagopal contended.

The minister also alleged that the discriminatory approach of the Centre also exists in the matter of borrowing rights of the states.

He further said that the state should get the tax share that it is eligible for and there should be a timely increase in grants to local bodies.

Kerala is also eligible for special additional assistance due to its emphasis on welfare activities, he said.

"Various other states are also facing this kind of financial discrimination. All these things will be part of the discussion in the conclave," he said.

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