Kerala CM warns of fiscal strain, stresses secular and democratic values

Kerala Chief Minister Pinarayi Vijayan on Tuesday said states across the country are facing growing fiscal constraints even as their responsibilities in public service delivery and development continue to expand, calling for greater predictability and fairness in intergovernmental fiscal arrangements.

Addressing the valedictory session of the Vision 2031 International Conference , Vijayan said states today play a critical role in delivering essential services such as health, education, social protection and infrastructure. However, their fiscal space has become increasingly constrained due to changes in borrowing limits, central transfers and the overall structure of intergovernmental finance.

Referring to Kerala’s experience, the Chief Minister said the state has consistently mobilised a relatively high share of its own revenues and maintained strong public service delivery despite fiscal pressures. Kerala has largely adhered to fiscal discipline norms, with the f iscal deficit for 2024–25 estimated at around 3.4 per cent of the Gross State Domestic Product, within the limits prescribed under the Fiscal Responsibility and Budget Management framework. At the same time, the state continues to run a revenue deficit of about 2.1 per cent of GSDP, reflecting pressures arising from recurring expenditure. Kerala’s own tax revenue is budgeted at nearly ₹84,900 crore , but total public debt has risen to around ₹3.1 lakh crore , constraining fiscal flexibility.

“T his should not be seen in the language of confrontation but as a question of democratic governance,” Vijayan said, adding that cooperative federalism requires respect for constitutional roles and fiscal arrangements that enable states to discharge their responsibilities effectively.

Despite financial constraints, he said Kerala has continued to prioritise welfare, education and public services . Measures supporting students, workers and vulnerable sections reflect the state’s effort to balance fiscal responsibility with social commitment.

Highlighting Kerala’s secular ethos, the Chief Minister said secularism in the state is not merely a constitutional principle but a lived social practice visible in schools, neighbourhoods and workplaces. At a time when many societies, including India, are witnessing increasing polarisation, Kerala has largely preserved social harmony through inclusive public institutions and mutual respect.

Quoting Nobel laureate Amartya Sen , Vijayan said social cohesion is a precondition for development, as trust between communities and confidence in institutions are essential for economic activity, innovation and investment. Kerala’s secular ethos, he said, has been one of its most valuable economic assets.

Describing Vision 2031 as a collective exercise in reflection and dialogue, Vijayan said it seeks to understand Kerala’s past, critically assess its present and shape its future as the state approaches its 75th year. Tracing Kerala’s development journey from land reforms and investments in education and health to decentralised planning, he said markets alone cannot deliver social justice and economic growth must ensure dignity and basic security for all.

Looking ahead, he said Kerala aims to transform into a productive, knowledge-driven and environmentally sustainable economy while remaining firmly committed to democracy and secularism.