Social Security Cess Falls Short: Kerala Struggles to Cover Mounting Pension Arrears

Despite implementing a social security cess on alcohol and fuel, the Kerala Government finds itself grappling with insufficient funds to meet the mounting pension arrears. The government had faced criticism earlier for introducing a Rs 2 per litre fuel cess in the annual budget, aimed at generating funds for social security pensions. However, the funds collected so far, including Rs 510 crores from fuel cess and Rs 120 crores from liquor bottle cess, are reportedly inadequate to cover even a month’s welfare pension.

The government has defaulted in releasing funds for welfare pensioners since July, creating financial challenges for over 5 lakh individuals. Although the government excluded more than 5 lakh people from the pensioners’ list in July, claiming various reasons, it still requires Rs 780 crores to disburse social security pensions and welfare board pensions. The introduction of fuel cess has also led to a decline in diesel sales in the state, further impacting revenue collection.

In an attempt to address the financial constraints, the government has initiated the distribution of welfare pensions for the month of July. However, the total amount of Rs 667.15 crores earmarked for 44.97 lakh pensioners raises concerns about the sustainability of the pension system amidst the ongoing budget shortfall and revenue challenges.