
Kerala’s finance minister K N Balagopal has warned about the growing threat of a global “tariff war,” calling it a potentially “dangerous situation” for the Indian economy, particularly for Kerala, which relies heavily on exports across multiple sectors.
He was speaking at the Gulati Institute of Finance and Taxation (GIFT) in Thiruvananthapuram on August 5, while inaugurating a two-day seminar titled Post-Covid Development Challenges and Response: Kerala through the lens of State budgets.
The concern comes in the wake of recent trade policy moves by the United States and other major economies, which Balagopal says could create ripple effects across Indian trade. “It has to be examined how these policies impact the Indian economy and specifically Kerala,” he said, calling for deeper academic engagement on the issue.
While not directly naming any single trade move, Balagopal hinted at pressures from international quarters demanding that India slash its tariffs. He argued that such a move could leave India, and Kerala in particular, vulnerable to a flood of cheap imports.
“The tariff war looming over us will worsen our economy further,” he said. If the influx of imports increases, the resulting economic pressure could turn out to be “much worse than the Covid pandemic,” he warned.
Balagopal urged the academic community to immediately begin discussions that could offer some clarity on what these global trade shifts mean for India’s economic future. He proposed a roundtable discussion to study the implications and draw up a proactive response.
Given Kerala’s export profile—spanning food processing, marine, coir, tourism, and IT—there’s plenty at stake. A tariff war could easily unsettle these sectors, especially those already battling volatility and falling demand in global markets.
M A Oommen, economist and distinguished professor at GIFT, who chaired the session, backed the finance minister’s concerns. He added that Kerala must not only brace for external shocks but also fix internal issues.
From tackling corruption to boosting the performance of public sector enterprises and safeguarding biodiversity, Oommen said the State needs a long-term vision. He praised Balagopal’s budgetary strategies, calling them a sound use of linear programming techniques under fiscal pressure.
He also had a word of caution for Kerala’s political class, urging Left-leaning democratic forces to rise to the occasion and protect the economic interests of the State.