THIRUVANANTHAPURAM: Kerala expected six things in the Union Budget to overcome the state's financial crisis. Nothing else was considered, except for the extension of the benefit of taking an additional loan of 0.5% of the gross domestic product for one more year in the name of reforms in the electricity sector. The advantage through this is that Kerala will be able to take an additional loan of about 6500 crores per year.

The special economic package of Rs 24,000 crore, Rs 5,000 crore for Vizhinjam, Rs 2,000 crore for Wayanad, approval to take a loan from Rs 6025 crore for the development of national highways, and relaxation in the conditions of central grants were ignored. With this, Kerala will have to find another way to overcome the financial crisis in the state budget.

The central government has imposed strict restrictions on loans. States are allowed to borrow up to 3% of their gross domestic product. However, citing various reasons, for the past few years the centre has been taking an approach towards Kerala that is cutting short one-third of this. Various financial sources, including KIIFB, Social Security Pension Company, and treasury reserves, have also been included in the loan limit. With the introduction of GST, Kerala will not be able to increase its revenue by adjusting taxes.

Only 3800 crores

Of the amount allocated to states in various categories including central grants, allocations, project assistance, etc., 4.91 lakh crores have been added to the budget this time. Last year, when 25.01 lakh crores were allocated, Kerala was supposed to get 73000 crores, but it got only 32000 crores. This time, when there is an increase of 4.91 lakh crores, Kerala is supposed to get 14258 crores but will get only 3800 crores.

Although 1.5 lakh crore has been allocated for CAPEX, an interest-free capital investment loan scheme with a repayment period of 50 years, it is not certain that Kerala will get a share of it. Kerala has been denied CAPEX loans for the last three years. The state budget is being presented on the heels of the central budget. With the reduction in central share, the financial income in the state budget and thereby the deficit is likely to increase.