Time for out-of-the-box ideas, no fiscal correction, says Kerala FM

The Kerala government will not cut down on public spending at a time when the state is facing the worst crisis in a century, Kerala finance minister K N Balagopal has said.

“This is not the right time to think of fiscal corrections, and there is no question of us cutting down on spending. Rather, this is the time to think out-of-thebox, because as a democratic government we’ve to ensure the livelihoods are protected, which demands that we continued to spent so that economic activity doesn’t get stalled further and shrink an already-ravaged economy,” Balagopal said.

The state has been facing one

He also warned that “we’re in a time that’s worse than the Great Depression, and my fear is that we may face more difficulties going forward”.

Between FY15 and FY19, Kerala’s revenue plunged from 61% to 55%, according to the CAG report release in January.

According to the minister, the revenue decline accelerated after the roll out of GST as the state’s overall tax collection dropped by a third since then. Non-tax revenue halved to ₹6,000 crore and tax component of the state budget is down from ₹95,000 crore to ₹87,000-88,000 crore now.

As a result, public debt crossed 36% of GSDP in FY21 but nothing can be done now to correct it as the times are so bad, the minister said.

The state’s total debt burden

“When you are discussin cal corrections in the pre scenario, you have to accept the government has to en that social welfare measure run properly which means ing for public good and serv ensure economic growth, protecting the livelihoods am others, all at a time when revenue is shrinking. So, the way out is to think out-of-b the minister said, adding only a loose fiscal regime help.

While admitting that t has been a constant stagna in government revenues, Bal pal claimed that the situati “not the state’s own makin we have since 2018 been rav by one natural calamity a another and now the pande too”.