Finance Minister K.N. Balagopal on Friday accused the Centre of launching an intensified offensive against the State on the fiscal front. Adverse Central policies will deprive the State of ₹57,400 crore in Central transfers and loan approvals in the current fiscal, Mr. Balagopal said in a statement on the State’s financial status.
While the borrowing limit has been whittled down by ₹19,000 crore, the Revenue Deficit Grant, compared to last year, is down by ₹8,400 crore. The State also stands deprived of GST compensation to the tune of ₹12,000 crore. With its tax share from the divisible pool down from 3.58% to 1.925% under the 15th Finance Commission, the State also loses another ₹18,000 crore, according to him.
Overall, Kerala has experienced a reduction of ₹1.07 lakh crore in its gross borrowing limit alone since 2017. All this works against the best interests of the State, he said.
Mr. Balagopal reiterated that the State was facing a crunch on the financial front. Expenditures have not reduced, but increased. Revenue expenditure has risen from ₹1,19,930 crore in 2020-21 has risen to ₹1,43,129 crore in 2022-23. In the last few years, the State has been meeting its expenses increasingly from its own revenue sources. The situation is such that the State may have to bank on its own revenues for meeting 80% of the expenses this fiscal, Mr. Balagopal said.
‘Infra projects in limbo’
“We cannot go forward without acknowledging these financial realities. The Centre is slashing the tax share of the State as well as the assistance in Centrally assisted schemes. The State is also not permitted to complete infrastructure projects like the Vizhinjam seaport by taking loans on government guarantee,” he said.
But Mr. Balagopal termed the argument that the State was facing a debt trap “meaningless.” While Central government borrowings accounted for 6.8% of the GDP last fiscal, Kerala was permitted only 2.5%. At the same time, the State brought down its revenue deficit to 0.9%, which illustrates the success of the fiscal consolidation measures initiated by the State government, Mr. Balagopal said.
