Sitharaman blames both LDF, UDF for state's financial mess
Hyphen Web Desk
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Union Finance Minister Nirmala Sitharaman has attributed Kerala's current fiscal distress to the "reckless policies" implemented by successive Left Democratic Front and United Democratic Front administrations.
Addressing the Rajya Sabha, she dismissed allegations that the central government had curtailed funds to the state, asserting that Kerala's financial woes are self-inflicted due to poor governance.
Sitharaman highlighted that, according to the Reserve Bank of India, Kerala ranks among the top five financially stressed states. She pointed to continuous fiscal mismanagement by both the CPI-led LDF and the Congress-led UDF, which have alternated power in the state.
Sitharaman highlighted that, according to the Reserve Bank of India, Kerala ranks among the top five financially stressed states. She pointed to continuous fiscal mismanagement by both the CPI-led LDF and the Congress-led UDF, which have alternated power in the state.
The Finance Minister noted that over the past six years, starting from the 2016-17 fiscal year, the Kerala government has consistently exceeded its permitted borrowing limit of 3%, resorting to extra-budgetary borrowing exceeding ₹42,000 crore. This off-budget borrowing was conducted through entities such as the Kerala Infrastructure Investment Fund Board and the Kerala Social Security Pension Company Ltd, both of which lack independent revenue streams, thereby placing the repayment burden on the state's treasury.
In response to accusations of reduced central funding, Sitharaman provided comparative figures: during the UPA government's tenure from 2004 to 2014, Kerala received ₹46,303 crore in tax devolution and approximately ₹25,000 crore as grants-in-aid. In contrast, from 2014 to February 2024, under the Narendra Modi-led government, the state received ₹1,55,649 crore in tax devolution and ₹1,58,983 crore as grants-in-aid, despite the absence of Kerala ministers in the central cabinet.
In response to accusations of reduced central funding, Sitharaman provided comparative figures: during the UPA government's tenure from 2004 to 2014, Kerala received ₹46,303 crore in tax devolution and approximately ₹25,000 crore as grants-in-aid. In contrast, from 2014 to February 2024, under the Narendra Modi-led government, the state received ₹1,55,649 crore in tax devolution and ₹1,58,983 crore as grants-in-aid, despite the absence of Kerala ministers in the central cabinet.
She emphasized that Kerala has never received better support than under the current administration.
The state's financial crisis has sparked a political controversy, with both the ruling LDF and the opposition UDF criticising the central government for allegedly providing an inadequate share of budget allocations to he state.
The state's financial crisis has sparked a political controversy, with both the ruling LDF and the opposition UDF criticising the central government for allegedly providing an inadequate share of budget allocations to he state.
Union Minister George Kurian, a BJP leader from the state, countered by suggesting that Kerala could secure more funds if it were declared a "backward state," a remark that drew sharp reactions from both the Left and the Congress. State CPI secretary M.V. Govindan demanded an apology from Kurian, accusing the BJP of attempting to portray Kerala as impoverished.
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