Kerala CM alleges 'financial blockade' by Centre
GST
Dated:- 24-12-2025
PTI
Thiruvananthapuram, Dec 24 (PTI) Kerala Chief Minister Pinarayi Vijayan on Wednesday accused the Union government of imposing what he described as a “financial blockade” on the state, warning that sustained cuts in borrowing limits and central transfers are severely affecting Kerala's public finances and development plans.
Addressing a press conference here, Vijayan said the Centre's actions go against the spirit of federalism and have placed states like Kerala under growing financial stress, despite their efforts to improve revenue collection and manage expenditure responsibly.
“The Centre is speaking about development on one side, while on the other
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it has been reduced by Rs 14,358 crore. This includes deductions linked to KIIFB borrowings and pension-related agencies.
“These unilateral decisions have sharply restricted our ability to raise funds for development,” he said.
The CM also pointed to additional reductions imposed under the Guarantee Redemption Fund (GRF), despite Kerala having already set up the fund and deposited Rs 250 crore. He said irrational conditions were imposed, leading to a further cut of Rs 3,323 crore from the borrowing limit.
Vijayan said Kerala's fiscal position has been further weakened by reductions in central transfers. He noted that the state's share of divisible central taxes has steadily declined from 3.05 per cent during the Eleventh Finance Commiss
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e pointed to losses arising from changes in Goods and Services Tax (GST) rates, which he said could cost Kerala around Rs 8,000 crore in the coming financial year, with no compensation mechanism in place.
The chief minister also referred to cuts made under the Integrated GST (IGST) settlement. In April 2025, the Centre adjusted Rs 965.16 crore citing technical reasons, a move Vijayan said hit Kerala particularly hard as a consumer state dependent on IGST transfers.
“These sudden recoveries disrupt our budget planning and push the state into uncertainty,” he said.
Vijayan further said Kerala's export sectors including marine products, spices, cashew and textiles have suffered due to global trade challenges, including import restrictions
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