The Opposition UDF on Monday accused the LDF government of miserably failing in fiscal management, even as Finance Minister K.N. Balagopal sought to counter the charge saying that economic activities were progressing smoothly despite the squeeze caused by unfriendly Central policies.
The state of Kerala finances came up in the Legislative Assembly after the government agreed to discuss the economic consequences of recent treasury restrictions on an adjournment motion moved by Mathew Kuzhalnadan of the Congress.
The Opposition blamed the government for pushing the State to the brink of an unprecedented financial disaster through its inability to increase tax collection, expand the tax base and check evasion. Tax inflow from gold and liquor has remained stagnant despite the increase in their prices. Faced with a financial crisis, the government has run up huge arrears on contractors’ bills and even scholarships of SC/ST category students, the Opposition alleged.
“The prime duty of the State is to collect tax. Only then will we be able to implement welfare and developments. You have pathetically failed in this,” Leader of Opposition V.D. Satheesan told the government. Mr. Satheesan and Mr. Kuzhalnadan said that the Goods and Services Tax (GST) growth has dipped from 6.59% in 2023-24 to 4.07% in 2024-25.
Mr. Satheesan said the State has recorded only an increase of ₹454 crore in Kerala General Sales Tax revenue over the previous fiscal. Here, the growth fell from 3.46% to 1.66%. Tax revenues from gold has remained stagnant despite the per-sovereign price jumping from ₹4,800 during the pre-GST tax regimes to ₹80,000 now, Mr. Satheesan said. Tax evasion is rampant, he added, accusing the State GST department of being “inefficient to the core.”
Refuting the Opposition’s charges, Mr. Balagopal said the government did face difficulties, but he attributed them to the fiscal policies pursued by the Centre. According to him, the low GST growth rate in 2024-25 was largely due to the Centre withholding ₹965 crore from the State’s Integrated GST (IGST) share citing a shortfall in the overall IGST balance.
Mr. Balagopal also challenged the Opposition argument that Kerala was in a debt trap. The latest report of the Comptroller and Auditor General (CAG) on the finances of States has indicated that Kerala is not in a dangerous position with respect to debt, Mr. Balagopal said.
The report has placed Kerala on the list of States whose debt-GSDP ratio is below 25%. Going by the general trend of State debt doubling every five years, Kerala’s debt should have touched ₹6 lakh crore. But it remains below ₹4.7 lakh crore, he pointed out.
Deputy Opposition Leader P.K. Kunhalikutty urged the government to be “realistic” in its approach to fiscal management. Other southern States were growing at a much faster pace than Kerala, he pointed out. Despite its difficult financial position, the LDF government has declined to cut down on unnecessary spending and extravagance, Mr. Kunhalikutty said.
Published – September 29, 2025 07:42 pm IST
