Kerala under financial pressure due to curtailment by Centre, says Governor
The Budget session of the Kerala Assembly commenced on Tuesday with Governor Rajendra Vishwanath Arlekar reading out the Left Government’s policy address, which accused the Union Government of curtailing the State’s finances and pushing it into “severe fiscal stress”.
The policy address also criticised the Centre for intervening in subjects within States’ domains, excessive centralisation of power, and leaving bills passed by State legislatures pending for long periods.
Arlekar said that despite Kerala’s social and institutional achievements, the State continues to face “severe financial stress due to a series of adverse Union Government actions that undermine the constitutional principles of fiscal federalism.” The “adverse actions” mentioned in the policy document include the cutting by half, “without proper justification”, of Rs 12,000 crore that the State was to receive in the final quarter of the 2025-26 financial year.
“At the same time, amounts due to Kerala from the Government of India under central schemes-pending up to September 2025, including arrears from previous financial years-stand at Rs 5,650.45 crore. These curtailments have placed severe pressure on the State’s finances at a critical point in the financial year,” the governor said, reading from the policy document.
Other challenges cited include the new rural employment act, Viksit Bharat-Guarantee for Rozgar and Ajeevika Mission (Gramin) (VB-G RAM G) that replaced MGNREGA. Central contribution under the new act has fallen from 100 per cent to 60 per cent; recent GST rationalisation, which has caused an estimated revenue loss of over Rs 8,000 crore; and the impact of the US’s reciprocal tariff measures on the State’s export-oriented sectors.
