What are the factors that contribute to the financial unhealthiness of Kerala as stated by the Centre
Centre tells SC that Kerala is one of the most financially unhealthy States in the country.
- High levels of debt: Kerala has a significant debt burden, and the state's debt-to-GSDP (Gross State Domestic Product) ratio is among the highest in the country.
- Lower revenue mobilization: The state's revenue generation has been lower compared to its expenditure. The revenue from tax and non-tax sources has been inadequate to meet its fiscal requirements.
- Unsustainable fiscal deficits: Kerala has been consistently running significant fiscal deficits, indicating a mismatch between its expenditure and revenue. This leads to increased borrowing and debt accumulation.
- High expenditure on welfare schemes: While social welfare programs are important, Kerala has been criticized for its excessive expenditure on such schemes, which further strains its finances.
- Dependence on central transfers: Kerala's fiscal health is impacted by its heavy reliance on central grants and transfers for meeting its expenditure requirements, making it vulnerable to changes in central government policies and funding patterns.
- Inefficient public expenditure management: The effectiveness and efficiency of public expenditure management in Kerala have been questioned, with concerns over leakages, corruption, and lack of austerity measures.
- Inadequate revenue diversification: Kerala's revenue sources are relatively limited, with a heavy reliance on taxes on goods and services. There is a need for diversification of revenue streams to reduce dependence on a few sectors.
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