The Congress-led United Democratic Front (UDF) Opposition walked out of the Assembly on Thursday accusing the State government of stopping budgetary support for the Kerala Social Security Pension Limited (KSSPL).
Leader of the Opposition V.D. Satheesan said the State's flip flop had pushed 47 lakh beneficiaries into limbo. They include senior citizens, persons whose annual family income is less than ₹1 lakh and the needy.
The move was indicative of the State's grim financial situation. The administration was scrambling to pay the salaries of State employees. The government had washed its hands of the beneficiaries by withdrawing budgetary support for the KSSPL. It would no more underwrite the debt incurred by the company.
The State formed the company in 2018 to ensure seamless disbursal of pensions. It also allowed the firm to raise money from the open financial market to delink pension payments from the State's treasury.
Mr. Satheesan was critical of the government's escalating outside budget borrowings via KSSPL and Kerala Infrastructure Investment Fund Board (KIIFB). The CAG and the Centre had also flagged the impending KIIFB-caused debt trap.
He said the ill-thought policy of external borrowings would push Kerala into an abyss of irredeemable debt. He said the KIIFB also drew cash from the Consolidated Fund to support development.
Kerala's financial situation was increasingly precarious. The percentage of the government's debt was 31.3% of the Gross State Domestic Product (GSDP) or State income in 2019-20. It rose to 37.18% in 2020-21. The Reserve Bank of India (RBI) has warned that Kerala's debt percentage could touch 38.2% of the GSDP in 2026-27.
Kerala spent 18.8% of its revenue on making interest payments. The previous government had falsely claimed that the GST regime would increase State's tax revenue by 30%. It remained at a dismal 10%. The government's faulty financial management had imperiled the State's fiscal security.
Finance Minister K.N. Balagopal disputed the Opposition's accusation. He said the government had not defaulted on social security pensions even during the COVID-19 pandemic. The KSSPL helped for timely disbursal of welfare payments.
The government had incorporated the firm to allow it to raise money from the open financial market without the State's guarantee. However, the Centre had objected to the move to delink pension disbursal from the State's exchequer.
The Centre had portrayed the KSSPL's liabilities as debt incurred by the government. The Centre had also whittled away at the fiscal authority of States to borrow outside the budget.
Mr. Balagopal scoffed at the Opposition's suggestion that the government had ceased to support the KSSPL. Congress legislator Mathew Kuzhalnadan had moved the motion to adjourn the House to debate the State's grim financial situation.
Speaker M. B. Rajesh rejected the motion.
