Thiruvananthapuram | The Kerala Assembly on Monday witnessed a heated exchange between the ruling LDF and the opposition Congress-led UDF over the fiscal position of the state, with Finance Minister K N Balagopal asserting that the government has not compromised any welfare programmes despite financial challenges.

Balagopal rejected opposition charges of "mismanagement", giving a detailed account of the state’s revenue and expenditure over various periods.

He said proper fiscal management has enabled the state to continue its development programmes amidst difficulties.

His remarks came in response to an adjournment motion moved by the Congress-led UDF on the alleged "financial crisis and derailment of welfare initiatives".

Earlier, the government accepted the notice for the motion moved by MLA Mathew Kuzhalnadan.

“The state’s tax revenue has increased from Rs 47,660 crore to Rs 76,682 crore, while non-tax revenue rose by over Rs 16,000 crore from Rs 7,377 crore. Revenue and fiscal deficits have been reduced,” Balagopal said.

“The present government has spent Rs 42,847 crore on social welfare pensions alone.”

He admitted that although the Centre has cut deserved allocations to the state, Kerala has not backtracked from any development or welfare initiative.

“Capital expenditure has increased by 50 per cent. As many as Rs 1,000 crore were allotted to local self-government institutions outside budget and planning,” he added.

“If it is not the fiscal management of the state government, what else?” Balagopal asked, adding that "denial of deserved allocations would harm fiscal federalism".

Earlier, Leader of Opposition V D Satheesan charged that Kerala is facing an "unprecedented financial crisis" due to constant treasury restrictions and poor tax collection.

“The government has failed miserably in collecting taxes and implementing development and welfare activities,” he alleged.

"Fiscal mismanagement has cost the state deserved tax revenue. Tax evasion and shady business practices will affect genuine taxpayers and impact the state’s revenue in future," he claimed.

Kuzhalnadan alleged the government had “thoroughly failed” in tax collection, pointing to a 2.52 per cent dip in GST growth in 2024-25.

He accused the government of “cunningly” managing the economy by curtailing projects and imposing treasury restrictions, saying recent GST reforms, US tariff hikes, and increases in H-1B visa fee would affect the state’s economy.

“Yet the CPI(M)-led government has conducted no in-depth study or announcement,” he claimed.

Rejecting the allegations, CPI(M) legislator P Nandakumar said the government “has not backtracked on any welfare programme.”

He alleged that the Congress, which now criticises treasury regulations, had itself “shut down the treasury during its rule.”