Union Budget 2025: Kerala remains hopeful of a better deal this time

Kerala Finance Minister K.N. Balagopal (file)
| Photo Credit: S. MAHINSHA

With Union Finance Minister Nirmala Sitharaman set to present the 2025-26 Union Budget on Saturday (February 1, 2025), Kerala is eyeing fiscal prop-ups, including a renewed demand for a ₹24,000-crore special economic package, “to tide over the current liquidity stress.”

The southern State is eyeing – among other things – a ₹2,000-crore package for landslide-hit Wayanad, a special package for the Vizhinjam seaport project and a ₹1,000-crore special assistance for managing rising incidents of human-wildlife conflict.

Kerala Finance Minister K.N. Balagopal said here on Monday (January 27, 2025) that the State government was hopeful about the special economic package — a demand that remains unfulfilled though featuring high in the State’s 2024-25 Budget wish-list as well.

“Last time (2024-25 Budget), two States – Andhra Pradesh and Bihar – were provided special packages,” he pointed out. Kerala has in fact reiterated its demand for the special economic package observing that “it did not receive the attention it deserves” in Ms. Sitharaman’s previous Budget, he said.

In the case of the Vizhinjam seaport project, Kerala is eyeing ₹5,000-crore special assistance and also an urgent shift in the Centre’s stance on a ₹817.8 crore viability gap funding (VGF), which the Centre wants to be repaid in net value.

Other demands

Other demands include a ₹4,500-crore allocation for undertaking climate change-related initiatives, a ₹2,000-crore package for the rehabilitation process in landslide-hit Wayanad and a ₹1,000-crore special assistance for tackling human-wildlife conflict.

“The number of human deaths caused by wild animal attacks was 52 in 2021-22 and 184 in 2023-24. The extent of crop damage due to human-animal interface is rising at an annual rate of 49%,” Mr. Balagopal had informed the Centre at a pre-Budget consultation organised by Ms. Sitharaman in December, 2024.

Kerala has reiterated its demand for an annual Budget provision of ₹300 crore for supporting non-resident Keralites, and a special ₹2,000-crore package for meeting the needs of ‘return migrants.’

Hike in MSP sought

On the agricultural front, the State is eyeing hikes in the minimum support prices (MSP) for paddy and copra, enhanced support for tackling climate-change-related challenges and revitalisation of the plantation sector. The State Agriculture department wants the MSP for paddy to be hiked to ₹40 a kg. At present, the MSP provided by the Centre is ₹23 a kg.

For the transportation sector, the State has reiterated its demand for the SilverLine semi-high-speed rail project, the Nilambur-Nanjangud, Thalassery-Mysuru and the Angamaly-Sabari railway lines.

Additionally on the fiscal front, the State government has urged the Centre to continue the goods and services tax (GST) compensation scheme until “systemic issues” are fully resolved. Kerala also wants the normal borrowing ceiling enhanced to 3.5% from 3% of the Gross State Domestic product (GSDP) and the additional borrowing of 0.5% of GSDP tied to power sector reforms extended in 2025-26.

The State has also urged the Centre to de-link compliance with branding/naming guidelines from the conditions for availing CAPEX schemes and an exemption for borrowings by the Kerala Infrastructure Investment Fund Board (KIIFB) and the Kerala Social Security Pension Ltd from the State’s borrowing limit.

Mr. Balagopal called for schemes in the Union Budget that help increase jobs and the purchasing power of the people. “The Union Budget should focus on attracting investment and job opportunities and making sure that wealth trickles down to the people. The criticism is that the benefits of growth are confined to a few,” he said.