Kerala Budget 2025-26: The unbearable heaviness of debt | Thiruvananthapuram News
THIRUVANANTHAPURAM: FM Balagopal, bogged down by the state’s worsening finances, presented a budget that is neither populist nor imaginative. He missed out on an opportunity to present a sustainable financial blueprint for the state that witnessed one of the biggest natural calamities last year. Though he came out with schemes for the elderly and protection of vanishing coast, traditional methods of increasing taxes to up revenue were a dampener.He remained taciturn, a good habit amidst high-voltage sloganeering, but the budget could’ve been innovative
In a marked departure from expectations, finance minister KN Balagopal presented the last full budget of the second Pinarayi Vijayan govt here on Friday without the customary fireworks. Far from being populist as expected in view of imminent elections, his fifth budget was rather a strenuous exercise to avoid any disturbing course correction in efforts to improve the poor finances of the govt.
The budget for 2025-26 showcases a revenue of Rs 1,52,352 crore and an expenditure of Rs 1,79,476 crore, with the revenue deficit pegged at Rs 27,125 crore. It expects an increase of Rs 19,422 crore in revenue in the fiscal. Yet, he claimed that the state’s finances were on a path to recovery.
The govt proposes to increase land revenue tax by 50%, revise court fees and raise road tax on private vehicles older than 15 years by 50%. These proposals are expected to generate an additional revenue of Rs 305 crore. Balagopal also announced a rationalisation of the tax on electric vehicles. As a result, the flat 5% lifetime tax on electric vehicles will go. Electric vehicles that cost above Rs 15 lakh will be taxed at 8% of the vehicle cost.
The tax for EVs costing Rs 20 lakh and above will be 10% of the cost. The same rates will be applicable to cars that use battery renting facilities. The govt expects an additional revenue of Rs 30 crore from this.
The minister said pending instalments of the pension for govt service pensioners would be cleared this month, besides releasing the two pending DA instalments of govt employees. He also announced a 2% interest subsidy on home loans taken by govt employees from banks and other financial institutions. The govt will soon introduce an “assured pension scheme” in lieu of the participatory pension for govt employees. The govt is committed to clearing the social security pension arrears in a time-bound manner, he said.
Among allocations, the budget has set aside Rs 750 crore for rehabilitation works in Wayanad and Rs 75 crore to address mananimal conflicts. More importantly, Balagopal announced two IT infrastructure development projects as a revenue-generating model for KIIFB. He said the govt was also considering other proposals to raise the revenue of KI-IFB.
The minister announced a slew of development initiatives aimed at tapping the commercial potential to be opened up by Vizhinjam international seaport and new-age technologies like artificial intelligence and Fintech.
Programmes have also been announced for the care of the aged population and for people to monetise their unoccupied houses (K-Home) in a 10-km radius of major tourism destinations in association with the tourism department. Despite his claims of significant improvement in the state finances, the public debt increased from Rs 31,998 crore in 2023-24 to Rs 40,606 crore in the revised budget for 2024-25. This is despite a decrease of Rs 22,202 crore in the govt expenditure in 2024-25. The 2025-26 budget proposes to maintain the public debt at Rs 40,848 crore.
