Centre denying Kerala its rightful share in tax devolution: CM Vijayan

Business Standard

23-05-2025

Kerala Chief Minister Pinarayi Vijayan on Friday slammed the Centre, accusing it of denying the State its rightful entitlement in the tax devolution. The Chief Minister said that if the tax share had been allocated fairly, Kerala would have received an additional Rs2,282 crore in 2022-23 and Rs2,071 crore in 2023-24, respectively.
"In the financial years 2022-23 and 2023-24, Kerala's share in the total own tax revenue generated by all Indian states was 3.7%. However, the tax devolution Kerala received from the Union government during the same period was only 1.53% and 1.13%, respectively. Based on Kerala's population share, the rightful entitlement should have been 2.7%," Vijayan said at a public event to mark his government's fourth anniversary.
"If the tax share had been allocated fairly, Kerala would have received an additional Rs2,282 crore in 2022-23 and Rs2,071 crore in 2023-24. This is not an extra demand -- it is Kerala's rightful share," he added.
The Chief Minister said that his government presented this "injustice" before the 16th Finance Commission and made efforts to bring together other states to raise a collective voice.
"But the discriminatory attitude of the Union Government continues. Even in the 2024-25 financial year, the Centre has restricted state borrowings by Rs3,300 crore under the pretext of guarantee limits," he added.
"It is not just a denial -- false propaganda is being spread to justify this bias, portraying Kerala's financial management as poor. This is far from the truth. We've made consistent progress. Kerala's Gross State Domestic Product (GSDP) has risen from Rs5.6 lakh crore in 2018 to Rs13.11 lakh crore today. In 2016, per capita income was Rs1.48 lakh; now it is significantly higher. These figures reflect our economic growth and resilience," he added.
The Chief Minister said that despite deliberate roadblocks and financial restrictions from the Centre, Kerala has successfully implemented major projects.
" We have enhanced our domestic revenue and continued to push development initiatives forward," he said.
"Another important point is expenditure. The share of total government expenditure borne by the state governments is increasing. For the current financial year, the state's contribution is estimated to be around 70%. While the Centre's burden is decreasing, the responsibilities of states like Kerala are growing," he added.
He said that Kerala has consistently shown improvement in many economic sectors.
"We have managed to keep going. That is the strength of our economic policy. Whether it's in infrastructure, IT, or public welfare, Kerala has consistently shown improvement. Kerala was home to the country's first IT park with 640 companies. Although others advanced faster in recent years, our government, since coming to power in 2016, has worked to regain leadership in this domain, and we are seeing results," he said.
He said that Kerala has progressed significantly since 2016, when he assumed office as the Chief Minister.
"The LDF has now completed nine continuous years in office -- a rare achievement. When we compare the situation in 2016 to now, it's clear that Kerala has progressed significantly," he said.
"During this time, we have achieved results we can be proud of. In 2016, we released a manifesto after carefully studying Kerala's condition. Except for a few items, nearly all promises have been fulfilled. We released a progress report, and the people have endorsed it. Today, on completing the fourth year, we will present the latest progress report," he added.
The Chief Minister said this was a unique moment for Kerala.
"In a democratic nation like ours -- and across the world -- no other government has presented a report card of achievements in such a transparent manner," he said.
"Despite this, there is a persistent wave of negative propaganda claiming that Kerala is in economic ruins and no projects are progressing -- that we are a state adrift. Such falsehoods are being systematically spread. However, these narratives do not reflect reality," he added.
The Chief Minister said that the data from the Reserve Bank of India showed Kerala's debt-to-GSDP ratio has actually improved.
"In 2022-23, the gap between the state's debt and its internal revenue was 35.3%, and in 2023-24, it further dropped to 34.2%. This shows better financial management. In contrast, in 2023-24, Bihar's ratio was 39.3%, Punjab's in 2023-24 was 47.6%, and West Bengal's was 38.3%. The central government itself has a ratio of 56%," he said.
"Kerala's relatively low and improving ratio proves we are managing our finances wisely. These are not empty claims -- they are backed by credible data from RBI," he added.