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Union Budget: Kerala Alleges Neglect of State, Slams Reduced Allocation for MGNREGA, Public Health Sectors

Neelambaran A |
Kerala’s demands regarding an increased share of GST, an extension of GST compensation, approval for infrastructure projects, AIIMS, an increase in borrowing limits, etc. were not considered in the Union Budget.
Govt of Kerala

File Photo.

The Union Budget has come as a huge disappointment for Kerala with none of the key demands by the state finding a place in the Budget.

The government of Kerala has been pushing for an All India Institute of Medical Sciences (AIIMS) and rail infrastructure projects. The demand regarding fiscal issues – including the extension of Goods and Services Tax (GST) compensation, increase in borrowing limit and state-friendly approach for the cess and surcharges collected by the Union government – have also not been considered. 

The chief minister accused the Union Budget of being unbalanced, with the central government restricting the borrowing limit of the states while fixing its own fiscal deficit at 6.4% of the national revenue.

The state also expressed concerns over the reduction in allocation for the Mahatma Gandhi National Rural Employment Act (MGNREGA), which the state government effectively implements. The demand for support for the Ayyankali Urban Employment Guarantee Scheme was also not considered. 

The ruling Left Democratic Front (LDF) as well as the Opposition United Democratic Front (UDF) have slammed the Budget for neglecting the demands of Kerala. 


The government of Kerala had submitted a list of 17 demands for consideration in the union budget. The significant demands included seeking approval for the Thiruvananthapuram-Kasargod semi-high-speed rail infrastructure and AIIMS. 

Chief Minister Pinarayi Vijayan said in a statement, “The Budget presented by the Union Finance Minister in Parliament does not seek any solution to inequalities and further strengthens the concentration of corporate capital.” 

The LDF government has selected Kinalur in Kozhikode to set up AIIMS and has sanctioned 153 acres of land, but the Union government is yet to sanction approval for the same.


With increased restrictions on borrowing by the states and a lack of powers to levy taxes, the government of Kerala had demanded an increase in the deficit, an extension of GST compensation and an increased share for states from the GST.

The state government has demanded an upward fixation of fiscal deficit from the existing 3.5% of which 0.5% is exclusive for the power sector, citing the 6.4% targeted by the Union government. 

“There is no relaxation for borrowing for state governments, while more reiteration has been on the 15th Finance Commission recommendations,” said Vijayan. 

The inclusion of debts of the Kerala Infrastructure Investment Fund Board (KIIFB) and Kerala Social Security Pension Limited (KSSPL) in the public debt has restricted the borrowing limits of the state.

The slight relief came in the form of interest-less loans from the Centre, but the finance minister of Kerala, K N Balagopal, sounded a note of caution about the scheme possibly being a trap. The chief minister also said that the interest-free loans are not in the spirit of cooperative federalism. 


The Budget has drastically reduced the allocations for the MGNREGA and public health programmes. The minister for local self governance, M B Rajesh, questioned the lowered allocation of funds for MGNREGA and the intention of the BJP-led government. 

“For providing 100 days of work as promised in the MGNREGA, a total of Rs 2.72 lakh crores is required, but the Union government has allotted Rs 60,000 crores. With this allocation, only one-third of the promised days of work can be provided,” he said in a statement. 

The minister recalled the role played by jobs extended through MGNREGA during the pandemic. Being an effective implementer of the scheme, Kerala will feel the impact of the cuts.

“The massive cut in allocation for the nation's biggest job programme when the unemployment is increasing is difficult to understand,” he added.

The National Health Mission (NHM) has been allocated Rs 29,085.26 crores while the revised figure for 2022-23 stood at Rs 28,974.29 crore. “An increase of meagre 0.42% indicates reducing attention on the public health sector,” the chief minister noted. 

The LDF also flayed the reduction of funds for the central health schemes. From Rs 11,868.63 crores as per the revised estimates for 2022-23, the allocation for 2023-24 has come down to Rs 8,820 crores. During 2021-22, the sector received Rs 5097.44 crores.

Such reductions in the Union Budget, will in turn lead to reduced allocation for states. The chief minister has demanded a sympathetic approach towards the requirements of Kerala in the ongoing budget session of the parliament.

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