Kerala to Raise Centre’s Fiscal Curbs at Pre-Budget Meeting: Finance Minister Balagopal

Thiruvananthapuram: Kerala Finance Minister K N Balagopal on Friday said the state will firmly raise the issue of financial restrictions imposed by the Centre at the pre-budget meeting convened by the Union Finance Ministry. Speaking to reporters, Balagopal said he would attend the meeting in New Delhi on Saturday and place before the Centre the serious difficulties faced by Kerala due to policy decisions that have curtailed the state’s finances.

He said the Centre is regulating and restricting Kerala’s borrowing space. "Of the borrowing space allowed to the state, Kerala was to receive Rs 12,000 crore in the last three months of the current financial year. However, this was cut by nearly half to Rs 5,900 crore," he said. According to the minister, more than 17,000 crore due to Kerala in the current financial year has been cut. Apart from this, Rs 4,200 crore was reduced based on GDP and GSDP figures provided by the statistics department, he said, adding that the matter had already been raised with the Union finance minister.

Balagopal said further reductions include 4,700 crore citing off-budget borrowings, 3,300 crore under the Guarantee Redemption Fund, and 965 crore citing discrepancies in GSDP and IGST figures. He also pointed out that 1,922 crore, which the state received only after approaching the Supreme Court, has now been reduced.

“This is like foul play in the final overs of a match. This is the last phase of the financial year and also an election period,” he said, adding that such practices would attract penalties in sports, but there are no such checks when the Centre acts this way. The minister said the borrowing cut was communicated after the local body election results were announced. “We met the Finance Ministry on December 24 and raised our concerns, but no corrective steps were taken,” he said.

Balagopal warned that the cuts would severely affect Kerala, especially as the state government announced several welfare measures, including an increase in welfare pension amounts, in November last year. He said these actions came after the BJP and the UDF became uncomfortable with the welfare initiatives of the LDF government. Despite attempts to destabilise the state’s finances, Kerala has continued to implement welfare programmes effectively, he said. He urged Congress leaders and BJP MPs from Kerala to raise the issue if they have any responsibility towards the state.

The minister said he has informed the Union finance minister about Kerala’s improved financial performance, citing studies by the RBI and other agencies, improvement in fiscal consolidation and reduction in debt, all of which were acknowledged. He said Kerala ranks sixth in the country in own revenue growth and that 70 to 72 per cent of the expenditure to run the state comes from its own resources. In contrast, around 15 states depend on the Centre for nearly half of their funds.

Balagopal said Kerala ranks 18th among states in terms of borrowing and that there has been no sharp increase in the state’s debt. Kerala’s GSDP, he added, rose from 5.62 lakh crore in 2015–16 to 12.49 lakh crore now. “Our financial capacity has nearly tripled,” he said.

At the pre-budget meeting, Kerala will submit a memorandum raising issues including revenue loss after GST, rubber price subsidy, hike in paddy procurement prices, railway development, the Vizhinjam port and township project, and assistance for scheme workers. He said the economic slowdown must be addressed and growth benefits should reach more people.