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Kerala Finance Minister K N Balagopal has raised concerns that the Union Budget signals an economic slowdown, citing weak growth in Central revenue receipts and cuts across key sectors. He pointed to marginal revenue growth of under three per cent, reduced allocations for welfare and social sectors, and delays in fund disbursals for major schemes like the Jal Jeevan Mission. Balagopal also linked domestic economic pressures to global trade dynamics, GST restructuring impacts, and risks posed by free imports, while stating that Kerala's demands were ignored.
The Union Budget presented by the Union Finance Minister reflects worrying signs for the Indian economy and points to a possible slowdown, according to Kerala Finance Minister K N Balagopal. Speaking during a programme where he presented a comparative reading of the Kerala State Budget and the Union Budget, Balagopal said the Centre's revenue position indicates stress rather than stability. Advertisement
He pointed out that the Central government's total revenue receipts have risen only marginally. Revenue collections stood at around INR 38 lakh crore in the previous year and have increased by just INR 1 lakh crore in the current Budget, translating into growth of less than three per cent. Balagopal noted that annual revenue growth typically exceeds this level, making the present increase a cause for concern.
Balagopal further explained that several revenue assumptions built into the Budget may not be met. If those projections fall short, the Centre could end up recording similar revenue receipts in the next financial year as well. In real terms, after adjusting for inflation, this would effectively mean a decline in revenue, signalling a slowdown in economic activity.
He also criticised the allocation pattern in the Union Budget, stating that funding cuts have been made across multiple sectors. According to him, allocations for MGNREGA alone have been reduced by INR 58,000 crore. He added that budgetary support for school education, health services, and fuel subsidies for diesel and petrol pumps has also been scaled back.
The Kerala finance minister said the Centre has not fully released funds promised in the previous Budget, creating financial strain for states. Citing the Jal Jeevan Mission, he said that although INR 67,000 crore was allocated earlier, only about INR 17,000 crore was actually released. Due to delayed payments, Kerala had to borrow INR 5,000 crore to pay contractors involved in implementing the scheme.
Reiterating his concerns, Balagopal said Kerala cannot remain insulated if the national economy weakens. He linked domestic economic challenges to global developments, arguing that international political dynamics are influencing India's economic policies. He claimed that India has become vulnerable to global tariff conflicts, particularly those driven by the United States.
He accused the Central government of shaping policies to suit US interests, alleging that trade and tariff decisions were being influenced externally. According to Balagopal, the US is effectively setting terms on pricing, imports, exports, and taxation structures affecting Indian markets.
Balagopal also referred to the restructuring of the Goods and Services Tax, stating that it followed critical remarks made by former US President Donald Trump about the Indian economy. He said GST collections were around INR 2.3 lakh crore per month before the restructuring but fell to about INR 1.72 lakh crore per month immediately after, marking a sharp monthly decline of roughly INR 60,000 crore. He linked this drop to the stagnation in Central revenue receipts.
He further warned against the free import of agricultural products such as milk. Referring to information shared by a contact familiar with Australia's dairy sector, Balagopal said imported milk could be sold in India at INR 26 to INR 28 per litre, which could severely impact over 10 lakh Indian farmers dependent on dairy farming.
The Kerala finance minister also said the Union Budget ignored the state's repeated demands. Despite seeking Central support for industrial development, including in defence-related sectors, Kerala found no meaningful provision addressing its requirements in the Budget.
Source PTI
FAQ
Q1. What concerns did Kerala Finance Minister K N Balagopal raise about the Union Budget?
K N Balagopal said the Union Budget points to signs of an economic slowdown rather than stability. He highlighted weak growth in Central revenue receipts, reduced allocations for key welfare sectors, and delays in fund disbursal for major centrally sponsored schemes, which he believes reflect underlying stress in the economy.
Q2. Why did he describe Central revenue growth as worrying?
Balagopal pointed out that Central revenue receipts increased from around INR 38 lakh crore to about INR 39 lakh crore, a rise of less than three per cent. He noted that such low growth is unusual, as annual revenue increases are typically much higher, and warned that after adjusting for inflation, real revenue growth could turn negative.
Q3. What issues did he highlight regarding budget allocations and spending?
He criticised cuts across multiple sectors, stating that allocations for MGNREGA were reduced by INR 58,000 crore. According to him, spending on school education, health services, and fuel subsidies has also been scaled back, which could weaken social support systems and affect vulnerable sections of the population.
Q4. How did delayed fund releases affect Kerala, according to Balagopal?
Balagopal said the Centre has not released full funds promised in earlier Budgets. Citing the Jal Jeevan Mission, he noted that only about INR 17,000 crore was released out of an allocation of INR 67,000 crore. As a result, Kerala had to borrow around INR 5,000 crore to pay contractors, adding financial pressure on the state.
Q5. What link did he draw between domestic economic issues and global factors?
He argued that India's economy is increasingly exposed to global trade dynamics, particularly tariff conflicts involving the United States. Balagopal claimed that international political pressures are influencing India's trade, tariff, and taxation policies, making the domestic economy more vulnerable to external shocks.
Q6. What were his observations on GST restructuring and revenue trends?
Balagopal said GST restructuring led to a sharp fall in collections. He claimed that monthly GST revenues dropped from around INR 2.3 lakh crore to about INR 1.72 lakh crore after restructuring, a decline of nearly INR 60,000 crore, which he linked to stagnation in overall Central revenue receipts.
Q7. Why did he warn against free imports, especially in agriculture?
He cautioned that free imports of products like milk could harm Indian farmers. Referring to global price comparisons, he said imported milk could be sold in India at INR 26-28 per litre, potentially affecting more than 10 lakh farmers dependent on dairy farming.
Q8. What did he say about Kerala's demands in the Union Budget?
Balagopal said the Union Budget ignored Kerala's repeated requests for Central support, including assistance for industrial and defence-related development. He argued that the absence of provisions addressing the state's concerns reflects a lack of consideration for Kerala's economic priorities.
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