Fiscal federalism, or rather its perceived erosion in recent times, has occupied centre stage in the increasingly strained financial relations between the BJP-led Union government and the Left-ruled Kerala government in the run-up to the 2024 Lok Sabha elections.
The CPI(M)-led Left Democratic Front (LDF) has consistently blamed the Modi government for Kerala’s deepening financial woes. Recently, Kerala Finance Minister K.N. Balagopal attributed the “financial crunch” to unfair cuts in Central transfers, the revenue deficit grant, GST compensation, and loan approvals. The Centre denied these accusations.
The conflict hit a new flashpoint on November 25 when Union Finance Minister Nirmala Sitharaman, while in Thiruvananthapuram, denied any negligence in releasing funds to Kerala. And if money had indeed been withheld, it was on account of the State’s failure to meet the necessary criteria, she said. She added that the Pinarayi Vijayan government was welcome to move the Court on the matter, but that it would merely offer her another venue to explain “what the story is really.”
