Finance Minister begins preparations for budget; 'financial magic' needed to overcome severe financial crisis

THIRUVANANTHAPURAM: As Kerala prepares for its upcoming budget, scheduled for February 7, Finance Minister KN Balagopal faces mounting pressure due to the state's ongoing financial difficulties. Despite the announcement of a "Plan B" in last year's budget to tackle the crisis, its implementation remains pending. With local body elections scheduled for this year and assembly elections next year, the government is expected to introduce several announcements aimed at benefiting the public. However, the persistent financial crisis remains the primary challenge. The anticipation lies in what "magic" the Finance Minister has planned to navigate this election year.

Last year's budget revealed a tantalizing promise: if additional central assistance didn't materialize, the state government would unleash its mysterious 'Plan B'. However, the suspense was short-lived, as the government failed to elaborate on the plan's details or even implement it. Many schemes were announced with the goal of seeking central assistance beyond what has been allocated. However, the central government has maintained that Kerala will receive only what it is entitled to under the current norms.

As the fiscal year enters its final quarter, the state faces a severe financial crunch. Despite approaching the Supreme Court to counter the central government's stance, the state has not achieved the expected outcomes. Attempts to form a coalition of non-BJP-ruled states to pressure the Centre also failed to yield significant results.

Drastic reductions in schemes
Due to the financial crisis, the current fiscal year saw drastic reductions in planned schemes, with nearly half being scaled back. As of now, only 40.98% of the schemes have been completed, compared to 55.24% at the same time last year.

Challenges that await the government

• Only one instalment of social pension arrears, spanning five months, has been disbursed so far.
• Arrears in benefits for government employees remain unpaid. Of the dearness allowance arrears pending since 2021, only one year's dues have been settled.
• The budget must include an announcement of the pay revision for government employees.
• An alternative scheme for the contributory pension scheme, guaranteeing a fixed percentage of the pension amount.
• Need to find funds for various commitments, including Wayanad rehabilitation and increasing the welfare pension.

Financial Demands
Rs 24,000 crore: Amount requested by the state during the pre-budget discussion convened by the Union Finance Minister.
Rs 17,000 crore: Additional borrowing permission sought from the central government.