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Kerala facing liquidity stress due to declining Union fiscal transfers: Governor

Jan 17, 2025 05:12 PM IST

Kerala governor Rajendra Vishwanath Arlekar’s policy address at the state Assembly highlighted the Left Democratic Front (LDF) government’s commitment to eradicating extreme poverty

Kochi: Kerala governor Rajendra Vishwanath Arlekar’s policy address at the state Assembly on Friday, highlighted the Left Democratic Front (LDF) government’s commitment to eradicating extreme poverty and ensuring social justice while acknowledging financial challenges due to declining Union fiscal transfers.

Kerala Governor Rajendra Vishwanath Arlekar delivers policy address at the 13th session of the 15th Kerala Legislative Assembly, in Thiruvananthapuram (PTI)
Kerala Governor Rajendra Vishwanath Arlekar delivers policy address at the 13th session of the 15th Kerala Legislative Assembly, in Thiruvananthapuram (PTI)

Arlekar, who assumed office on January 2, adhered to the government-prepared script and avoided controversies, a marked contrast to his predecessor, Arif Mohammed Khan, who had clashed with the government during his tenure. Khan had only read the first and last paragraphs of the policy address last year amid ongoing disputes.

The speech emphasised the state’s vision of building a ‘Nava Keralam’ (New Kerala) with a knowledge-based economy, quality education, robust infrastructure, poverty eradication, and universal housing.

Arlekar said that the state government’s commitment to building a ’Nava Keralam’ (New Kerala) will be endowed with “knowledge based economy, quality education, high quality physical infrastructure, eradication of extreme poverty and guaranteed housing to all.”

He added that 64,006 families in extreme poverty had been identified, with efforts underway to uplift them. Additionally, over 4.24 lakh families have been provided housing under the flagship ‘Life Mission’ scheme, with another 1.13 lakh families signing agreements for homes.

Arlekar emphasised that the state “faces liquidity stress due to the declining share of Union fiscal transfers, despite earnest efforts in revenue mobilisation and expenditure rationalisation.”

“Kerala has been facing financial stress due to the tapering of revenue deficit grants and the cessation of GST compensation. In a detailed memorandum presented to the 16th Finance Commission during its visit to the state in December 2024, the challenges faced by Kerala were highlighted, and ameliorative measures were requested. We hope for the best,” Arlekar said.

In his hour-long address, Arlekar pointed out that Kerala has significantly contributed to national highway widening projects by bearing a substantial share of the land acquisition costs.

“This expenditure should be recognised as additional capital investment for national highways. Including it within the State’s borrowing limits could hinder Kerala’s ability to support large-scale infrastructure projects, countering the Union government’s emphasis on promoting State capital expenditure,” he said, reiterating the State’s request for an unconditional borrowing allowance of 6,000 crore this financial year.

He also reaffirmed the State’s commitment to rehabilitate all those displaced by the Meppadi landslide within a township within one year and highlighted initiatives undertaken by the State in agriculture, fisheries, cooperation, health, and education sectors.

Apart from the brief mention of declining Union fiscal transfers, the policy address avoided contentious topics such as the recent UGC draft guidelines, delays in a special financial package for the Wayanad landslide, and the One Nation, One Election proposal.

The Governor’s address marked the beginning of the 13th session of the Assembly, scheduled to meet for 27 days between January 17 and March 28.

The motion of thanks on the Governor’s address will be discussed from January 20 to 22.

Finance minister KN Balagopal will present the financial year 2025-26 budget on February 7, with the announcements keenly anticipated as the State gears up for local body elections later this year and Assembly polls next year.

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