Kerala CM demands Union government to end ‘economic embargo’ imposed on State

Demanding the Union government to immediately end the “economic embargo” being imposed on Kerala for the past few years, Chief Minister Pinarayi Vijayan on Wednesday said that such political manoeuvres to destroy the State’s development model will not succeed in the face of the will of Kerala, which has survived floods and epidemics. Speaking at a press conference, he said that there have been intense efforts, especially over the past five years, to undermine Kerala’s efforts for capital expenditure.

He said that the Centre had reduced Kerala’s market borrowing limit with retrospective effect from 2021-22 by considering Kerala Infrastructure Investment Fund Board (KIIFB)’s external borrowings as State loans, though the Reserve Bank had clarified in 1999 that guarantee and loan are not the same. On the other hand, the Union government said that the National Highway Authority of India’s ₹3.4 lakh crore debt will not be added to the Central debt.

“A detailed memorandum was submitted to the Union Finance Minister Nirmala Sitharaman on October 9, 2025, listing the crises created by the Union government. However, the Centre continues to take a negative stance. The Union government is playing double standard — talking about development on one hand and trying to economically cripple States like Kerala on the other side. The State is set to lose around ₹8,000 crore in revenue in the next financial year alone due to rate rationalisation. The Centre has cut our borrowing limit by ₹14,358 crore in 2025-26 alone,” he said.

‘Systematic management’

Mr. Vijayan said that the Left Democratic Front (LDF) government has been able to make a huge leap in the State’s own revenue and resource mobilisation in the last eight years. The fact that the our own tax revenue has increased from ₹47,000 crore in March 2021 to about ₹80,000 crore is the result of systematic financial management.

He said that the Centre, instead of acknowledging Kerala’s exemplary approach in national highway development by agreeing to bear 25% of the land acquisition cost, has punished the State by including the amount of ₹6,679 crore in the borrowing limit.

He accused the 18 United Democratic Front (UDF) MPs from Kerala of failing to raise in the Parliament the problems faced by the State in this regard.