Chief Minister Pinarayi Vijayan unveiled a comprehensive welfare expansion on Wednesday, elevating social pensions to Rs 2,000 monthly for 62 lakh beneficiaries and introducing new Rs 1,000 grants for women aged 35-60 from poor households and five lakh skill-training youth. Honorariums for ASHA, Anganwadi workers, and others rose by Rs 1,000, alongside a 4% DA hike and accelerated pay arrears clearance. The package, projected at Rs 18,000 crore annually, represents a 10% surge in revenue expenditure.

Finance Minister K N Balagopal defended the measures as fiscally prudent, asserting thorough deliberation and confidence in delivery. The government highlighted ongoing infrastructure achievements, including Vizhinjam Port and national highways, while managing past fiscal strains from pay revisions and GST compensation shortfalls. Central grants, however, declined 56% in 2023-24, constraining total revenue despite a 19% rise in tax devolution.

Economist Rudra Sensarma of IIM Kozhikode cautioned that recurring commitments without corresponding revenue streams risk unsustainable deficits. He recommended revenue augmentation through lottery price revisions, excise duty hikes, transport fee adjustments, and PSU land monetization to avert a fiscal crisis in the absence of robust mobilization strategies.

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Professor K N Harilal, heading the State Finance Commission, countered that Kerala’s fiscal health has stabilized post-crisis. Own tax revenue grew 3.28% to Rs 74,329 crore in 2023-24, with non-tax receipts up 8.12%. He stressed Kerala receives only 25% of revenue from central transfers versus the national 50% average, arguing equitable 16th Finance Commission awards would enable sustained welfare and development.

The package’s viability hinges on enhanced central support and internal revenue efficiency. With welfare pensions alone costing Rs 13,000 crore, the state must balance populist commitments against fiscal discipline. As the 2026 budget approaches, Kerala’s ability to fund promises without borrowing escalation will determine long-term economic stability.

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