Kerala Facing Financial Problems Due to Centres Unfriendly Fiscal Approach: CM Pinarayi Vijayan

Kerala Chief Minister Pinarayi Vijayan on Wednesday said that the state is facing financial problems due to the Centre's unfriendly fiscal approach. However, he asserted that the state will not stop implementing welfare schemes.

Efforts to Lead State to Achieve Goals

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, said Vijayan, who is heading the country's lone Left-led government.

Financial Problems Acknowledged

Criticizing the Centre for its approach to states in terms of fiscal matters, the senior CPIM leader acknowledged that the Kerala government was facing financial problems. The 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.

Welfare Schemes to Continue

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 and GST Impact

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 to Kerala's revenue.

Shortfall in Funds from the Centre

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.

Increase in State's Own Tax Revenue

The increase in the state's own tax revenue in 2021-22 was 22.41 percent and the same rose to 23.36 percent in 2022-23. The chief minister also highlighted that the state's revenue deficit has come below one percent (0.9 percent) for the first time in history.

Success of Fiscal Consolidation Activities

All these factors indicate the success of Kerala's fiscal consolidation activities as per the schedule set by the Finance Commission, he said. Despite the financial challenges posed by the Centre's unfriendly fiscal approach, the Kerala government remains committed to implementing welfare schemes and leading the state towards achieving its goals without compromising development and welfare activities.