A recent report by the Comptroller and Auditor General (CAG) has revealed that Kerala spends 73.4% of its total revenue on employee salaries, pensions, and debt interest payments. The report, which was presented to the state legislature, highlights that nearly three-fourths of the state’s revenue goes toward these expenses. In the fiscal year 2023-24, Kerala’s total revenue income stood at Rs 1,24,486 crore, with a revenue deficit of Rs 18,140 crore. The government allocated Rs 38,573 crore for employee salaries and Rs 27,106 crore for pensions, with 10 lakh government employees and pensioners accounting for 53% of total revenue expenditure in a state with a population of 3.4 crore.
Economic analysts have pointed to Kerala’s persistently high expenditure ratio as a key factor contributing to the state’s ongoing financial crisis. The report outlines that 41% of the state’s revenue is generated through tax collections, while 7% comes from non-tax sources and 5% from grants. The remaining portion of the revenue is secured through loans and investments. The high spending on salaries and pensions has left limited fiscal space for developmental projects and other essential expenditures, further straining the state’s financial health.
Additionally, the central government’s stringent borrowing restrictions have constrained Kerala’s ability to raise funds as per budgetary projections. Although the state government had aimed to borrow Rs 51,856 crore in the previous year, it managed to secure only Rs 35,020 crore. This shortfall has further exacerbated the financial challenges faced by the state, making it difficult to bridge the revenue deficit and sustain ongoing expenditure commitments.
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