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Finshots Daily
Why is Kerala in a financial crisis?
Apr 11, 2024
Exploring Kerala's financial struggles, defaulted payments, and the blame game with the central government in a revealing analysis of the state's fiscal crisis.
05:23
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Quick takeaways
- Kerala's high committed expenses hinder infrastructure investment, exacerbating financial crisis.
- Central government rules, like the net borrowing ceiling, restrict Kerala's borrowing capacity, leading to legal dispute.
Deep dives
Kerala's Chronic Revenue Deficit State
Kerala is facing a severe financial crisis due to being classified as a chronic revenue deficit state. The state's committed expenses, including salaries, pensions, welfare schemes, and interest payments, are considerably high, reaching 71% of its revenue receipts compared to the average of below 60% for other states. This limits Kerala's ability to invest in infrastructure projects that could stimulate job creation and generate additional revenues, leading to long-term financial difficulties. Despite heavy investments in social sectors like education and healthcare, which have yielded positive outcomes such as improved child survival rates, Kerala's struggle with revenue generation persists.
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