Public spending inevitable in shaping Kerala’s future, says Finance Minister

Public spending is inevitable for the development of Kerala, Finance Minister K.N. Balagopal has said. He was speaking on the topic ‘Keralam@2031: A new vision’ at a seminar organised by the State government here on Monday. Mr. Balagopal also called for a collective movement to ensure that the State got its due fiscal shares from the Centre.

“Public spending by Central and State governments plays a huge role in development. Hence, a collective movement is required to ensure that Kerala gets its due shares. We have to go forward giving more importance to the services sector along with agriculture and industries,” he said.

Blaming the Centre for slashing tax shares, imposing restrictions on availing loans, and stopping compensations on account of GST implementation, Mr. Balagopal said the State had been denied revenue opportunities to the tune of over ₹50,000 crore a year. “Had the State received the total amount it deserved, the government would have been able to realise development and welfare works worth around ₹2.5 lakh crore,” he said.

The Minister said that the State did not impose any cut on public spending and development works despite all adverse circumstances. “This year, our own revenue is surging towards ₹1 trillion. We take forward development works by raising our own tax and non-tax revenues,” the Minister said. “KSFE has clocked an annual business of ₹1.04 lakh crore. The turnover of Kerala Financial Corporation (KFC) this year is set to touch ₹10,000 crore. We have also been achieving impressive gains in lotteries, State insurance and National Savings Scheme. The KFC offers huge support to start-ups, agriculture and MSME sectors,’ he said.

Explaining the fiscal challenges being faced by the State, the Minister reiterated that the recent revision in the GST structure might cause losses upto ₹8,000 crore to ₹10,000 crore to the State. He said a study had pointed out that the benefits of the cut in taxes had not reached the common people but gone to manufacturing majors.

The event, held as a series of seminars on Vision 2031 aiming to chalk out a growth trajectory for the State, opined that Kerala should surge ahead from the foundation of a knowledge-based economy.

Emerging opportunities

Addressing the gathering, Additional Chief Secretary (finance) K.R. Jyothilal said that the State was tapping into emerging economic opportunities, including the blue economy and critical metals, leveraging indigenous technology to supply high-tech manufacturing for engines, EVs, pipelines, drones, and global markets.

“Kerala is progressing toward financial self-reliance, emphasising its own revenue generation and addressing vertical imbalances between the Centre and States through grants and transfers,” he said.

Various sessions of the seminar covered topics such as Kerala’s economic development models, port-based development and GST and financial federalism. Industries Minister P. Rajeeve inaugurated the concluding session.