Kerala CM: State Faces Financial Crisis, But Welfare Schemes Continue

Thiruvananthapuram, Nov 8 (PTI) Kerala is facing financial problems due to the Centre's unfriendly fiscal approach but the state will not stop implementing welfare schemes, Chief Minister Pinarayi Vijayan said on Wednesday.

Amid the continuing political slugfest between the ruling BJP at the Centre and opposition parties in the states over doling out freebies, Vijayan asserted that Kerala does not accept the central government's stand that there should be no freebies.


"Efforts are being made to lead the state to achieve its goals without compromising development and welfare activities," Vijayan, who is heading the country's lone Left-led government, said at a briefing here.

Criticising the Centre for its approach to states in terms of fiscal matters, the senior CPI(M) leader acknowledged that the Kerala government was facing financial problems.

"It (Kerala government) is facing extreme attacks from the central government on the financial front," Vijayan said and reiterated that with the introduction of the Goods and Services Tax (GST), states have lost a lot of power in collecting taxes.


He said that despite the Centre's unfriendly financial approach, the state government would not back down from implementing welfare schemes.


According to Vijayan, the state is trying to overcome crises by raising its own revenue and through careful financial management.

Fiscal management of the state is based on the basic principles of economic consolidation by boosting tax collection and controlling excess expenditure, the chief minister said.


Noting that the state's right to tax collection has been restricted to petrol, diesel, and liquor, Vijayan said the fixing of ceilings on GST rates and the significant reduction of the revenue neutral rate have been a blow for Kerala's revenue.


This year, there is a shortfall of Rs 57,400 crore in the amounts received from the Centre, the chief minister said.


Further, Vijayan alleged that the central government denied Rs 19,000 crore of the loans that the state deserves, and there was also a Rs 8,400 crore shortfall in revenue deficit grant compared to last year.


The increase in the state's own tax revenue in 2021-22 was 22.41 per cent and the same rose to 23.36 per cent in 2022-23.


The chief minister also highlighted that the state's revenue deficit has come below one per cent (0.9 per cent) for the first time in history.


"All these (factors) indicate the success of Kerala's fiscal consolidation activities as per the schedule set by the Finance Commission," he said.