New Delhi / Thiruvananthapuram:
Kerala has received significant financial relief following the recommendations of the 15th Finance Commission, with the state set to receive an additional ₹11,855 crore from the Centre. While Kerala received ₹24,500 crore as its share of central taxes last year, this year the amount has increased to ₹36,355 crore, marking a substantial rise.
At a time when the Kerala government has repeatedly complained that the Centre has been reducing the state’s rightful share, the Finance Commission’s decision has come as a major relief. According to the new recommendation, Kerala will receive 2.382% of the Centre’s divisible tax pool, compared to 1.925% earlier. This increase alone accounts for the sharp rise in the state’s allocation.
Relief for the State Finance Department
Kerala had been hopeful that the new Finance Commission would recommend a higher allocation. Although the state had demanded an even larger share, the increase granted has brought considerable relief to the state finance department.
More than the announcements in the Union Budget, the Kerala government’s primary concern was whether its share of central taxes would increase. The state budget for the current year was prepared on the assumption that the Finance Commission’s recommendations would result in a higher allocation. Had the share been reduced, implementing several budget proposals would have become extremely difficult, officials noted.
Chief Minister Criticises Rejection of States’ Demand
However, Chief Minister Pinarayi Vijayan criticised the Finance Commission for rejecting the demand of Kerala and other states to increase the overall tax share devolved to states from 41% to 50%. He reiterated that greater tax devolution is essential to protect the financial autonomy of states.
Decision Likely to Trigger Political Debate
With elections approaching, the Centre’s decision to increase Kerala’s share is expected to become a major political talking point. While the additional funds have eased immediate financial pressure on the state, debates over Centre–state financial relations and fiscal federalism are likely to intensify in the coming months.
