Union Government’s Policy Shift on Centrally-Sponsored Schemes Adds Rs 4,857 Crore Burden to Kerala State Exchequer

The Kerala government is grappling with a financial burden of Rs 4,857 crore due to the union government’s shift in policy regarding centrally-sponsored schemes. The state’s chief secretary-led panel, tasked with assessing the impact of this policy change, revealed that before 2015, the union government used to contribute 80 to 85 percent of the funds for such schemes. However, the current funding structure is set at a ratio of 60:40 (Central: State), placing a heavier financial load on Kerala. The panel’s report highlights the strain on various departments, with the education sector facing an additional cost of Rs 1,713 crore. Other major departments affected include Women & Child Development (Rs 1,173 crore), Local Self Government (Rs 1,105 crore), Agriculture (Rs 624 crore), and Fisheries (Rs 57 crore). The state government is now urging respective departments to expedite measures to secure the union government’s share in a timely manner.

The altered funding dynamics have exacerbated Kerala’s financial challenges, impacting key sectors that play a crucial role in the state’s development. The financial constraints underscore the need for effective collaboration and negotiation between the state and union governments to ensure a sustainable and equitable funding arrangement for centrally-sponsored schemes, allowing Kerala to address its developmental needs without undue financial strain.