Thiruvananthapuram, Aug 26 (IANS) When V.D. Satheesan took over as Chief Minister and Finance Minister, one of his government’s first major moves was to lay bare what it described as the difficult financial legacy left by the Pinarayi Vijayan government.
The White Paper presented soon after the change of government put Kerala’s total liabilities at Rs 5.07 lakh crore.
It said a large part of the state’s income was already committed to salaries, pensions, interest payments and other unavoidable expenses, leaving little room for development.
For years in opposition, Satheesan had repeatedly accused the Vijayan government of relying heavily on borrowings to run the state.
He had argued that Kerala could not continue borrowing simply to meet its day-to-day expenses.
Now, after 100 days in office, Satheesan as the Chief Minister, faces the same question he had put to his predecessor: What is his government doing to reduce Kerala’s dependence on borrowing?
The answer so far is mixed. The new government’s first Budget continues to depend heavily on borrowing.
Kerala plans to raise around Rs 1.92 lakh crore in gross borrowings in 2026-27, compared with about Rs 1.70 lakh crore in the revised estimate for the previous year.
Borrowing, therefore, has certainly not stopped. But borrowing by itself does not tell the whole story.
The real test is whether the government can increase its own income enough to reduce the need for borrowing over time.
Here, CM Satheesan, who also holds the Finance portfolio, has set an ambitious target.
The government expects its own tax revenue to rise by 18 per cent to Rs 99,002 crore this financial year.
It expects more money from GST, registration, excise and other taxes.
The government has also announced steps to recover tax arrears, tackle undervaluation of property and improve tax collection.
But these are still largely measures and targets.
The bigger question is how much additional revenue has actually been collected during the first 100 days.
The government has also begun examining the future of KIIFB, the infrastructure financing agency that became a major point of criticism in the White Paper.
A committee has been asked to examine its financial structure and suggest changes.
At the same time, Kerala continues to face a basic problem, much of its income is already committed to salaries, pensions, interest payments and other expenses.
This leaves the government with limited room to spend on new development without borrowing.
So, 100 days into the new government, CM Satheesan has begun working on some of the problems he identified, but there is no evidence yet of a major change in Kerala’s borrowing pattern.
The crucial test lies ahead.
The White Paper diagnosed the problem.
The Budget has promised a cure.
The coming months will show whether CM Satheesan can actually increase revenue, control expenditure and gradually reduce Kerala’s dependence on debt, something he had demanded repeatedly when he sat in the Opposition.
–IANS
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