Public spending is indispensable for the sustained development of Kerala, Finance Minister K.N. Balagopal has said. Speaking at a seminar titled ‘Keralam@2031: A New Vision’ organised by the State government on Monday, the Minister emphasised that both the Centre and the States must recognise the critical role of government expenditure in driving growth. He also called for a collective movement to ensure that Kerala receives its rightful fiscal share from the Union government.
“Public spending by Central and State governments plays a huge role in development. Hence, a collective movement is required to ensure that Kerala gets its due share,” Balagopal said. “We have to move forward by giving greater importance to the services sector along with agriculture and industries,” he added.
The Minister accused the Centre of slashing Kerala’s tax share, imposing restrictions on borrowing, and discontinuing compensation related to the implementation of the Goods and Services Tax (GST).
As a result, he said, the State has been denied revenue opportunities to the tune of over ₹50,000 crore every year.
“Had the State received the total amount it deserved, the government would have been able to realise development and welfare works worth around ₹2.5 lakh crore,” he observed.
Despite these challenges, Balagopal asserted that the Kerala government has not cut down on development expenditure or public spending. “This year, our own revenue is surging towards ₹1 trillion. We are advancing development works by raising our own tax and non-tax revenues,” he said.
The Minister pointed out that the Kerala State Financial Enterprises (KSFE) has achieved an annual business turnover of ₹1.04 lakh crore, while the Kerala Financial Corporation (KFC) is expected to reach a turnover of nearly ₹10,000 crore this year. He also noted that the State is recording significant gains in lotteries, the State insurance sector, and the National Savings Scheme.
Balagopal said the KFC continues to play a vital role in extending financial support to startups, agriculture, and micro, small and medium enterprises (MSMEs). He argued that such institutions reflect Kerala’s economic resilience and capacity to sustain growth even amid fiscal adversity.
Explaining the fiscal challenges faced by the State, the Minister said the recent revision in the GST structure could cause losses of between ₹8,000 crore and ₹10,000 crore for Kerala. Citing a study, he added that the benefits of the tax cuts introduced at the national level had largely gone to manufacturing majors rather than to consumers. “The fiscal autonomy of States has been eroded under the present structure. GST, though conceptually sound, has failed to deliver equitable revenue to States like Kerala,” he said.
The event, part of a series of seminars on Vision 2031, sought to identify Kerala’s growth trajectory for the next decade. The discussion highlighted that Kerala should build on the foundations of a knowledge-driven economy, with a focus on education, technology and innovation.
Speakers at the event agreed that such a transition would help ensure inclusive and sustainable growth.