Decline in Kerala's central tax share is concerning: CM Pinarayi Vijayan

Pinarayi Vijayan

Kerala Chief Minister Pinarayi Vijayan said that his government is committed to strengthening the state’s investment ecosystem and has planned to translate all the 410 Expressions of Interest (EOIs) amounting to Rs 1.65 trillion investment in the recently concluded investment summit into reality.

In an interview with the Business Standard, CM Vijayan discussed the state’s economic policies, challenges with central funding, and his government’s commitment to women’s safety and infrastructure development.

Highlighting the takeaways from the Invest Kerala Global Summit, Vijayan asserted that the 410 EOIs show strong confidence in Kerala's investment ecosystem. He said that the state government is determined to ensure these intentions are converted into actual investments.

Private and public sector growth

On being questioned over the reputation of communists as anti-business, CM Vijayan said, “It is important to note that ours is not a socialist country and we operate within the framework of a constitution that upholds a mixed economy. Staying true to that spirit, we do not see industry as either private or public. We are fostering an environment where both the private and public sectors can flourish. Here, the private sector thrives not at the expense of the public sector, which is being dismantled at the national level as the Union government vigorously pursues a policy of intensified liberalisation.

Economic concerns

While some critics have pointed out Kerala's high revenue expenditure, which takes up almost 90% of its budget, the CM countered that his government had initiated the Kerala Infrastructure Investment Fund Board (KIIFB) to fund large infrastructure projects worth nearly Rs 90,000 crore. These initiatives, outside the regular budget, benefit critical sectors like education, healthcare, and transport. He also expressed concern about the state's declining share of central taxes and grants, noting that Kerala’s devolution share has dropped significantly since the 10th Finance Commission.

“What is actually concerning is the steady and continued decline in Kerala's share of central taxes and grants. You may recall that the Finance Commission's devolution to Kerala has dropped from 3.875 per cent during the 10th Finance Commission to just 1.925 per cent in the current 15th Finance Commission,” he said while speaking to Business Standard.

Kerala’s GSDP

The Kerala CM addressed the concerns over the state’s debt-to-GSDP ratio, emphasising that the state is focusing on increasing its GSDP by attracting investments. He stressed on the positive response from the Invest Kerala Global Summit as an example of how the state is poised for economic growth. “The recently concluded State Conference of the CPI(M) has approved a policy document titled Nava Keralathinulla Puthuvazhikal, which explores pathways for transforming Kerala into a developed society. This, in turn, will further drive GSDP growth,” Vijayan said.

He also criticised the Central government for considering Kerala’s borrowings for KIIFB and other agencies as part of the state’s debt, which, according to him, was inconsistent with the treatment of similar borrowings by the Centre.

Women’s safety

On the issue of crimes against women, he said that the state is firm and serious on ensuring safety and security of women. He highlighted several initiatives like the “Pink Patrol” and the “Ente Koodu”, which are designed to enhance women’s safety.

“We have set up a dedicated Department for Women and Children. Kerala is the only state with a Gender Budget, which accounts for 20.8 per cent of our total plan outlay. Initiatives, such as Pink Patrol and Ente Koodu, have been designed to ensure women's safety,” the CM said.