Kerala's central tax share has halved from 10th to 15th FC: Vijayan

He tells that the Centre has double standards in dealing with borrowings of certain agencies in the state and those at the Centre as sovereign debt

Kerala Chief Minister PINARAYI VIJAYAN says his government is committed to translating investment intentions in the recently concluded investment summit into reality. He tells Indivjal Dhasmana in an email interview that the Centre has double standards in dealing with borrowings of certain agencies in the state and those at the Centre as sovereign debt. He talks of the investment ecosystem in the state, the Vizhinjam port, women’s safety, and the prospects of the Left Front in the next Assembly elections. Edited excerpts:

 

State Industries Minister P Rajeeve has said the recent Invest Kerala Global Summit received expressions of interest (EoIs) worth around ₹1.53 trillion from 374 companies. How much of this could translate into actual investments?

 

The Invest Kerala Global Summit 2025 was a resounding success, showcasing Kerala’s immense potential as an investment destination. Over 5,700 delegates from more than 20 countries participated in the two-day event, which featured an exhibition on the Jewels of Kerala, 33 insightful sessions, and three high-level roundtable discussions.

 

A total of 184 speakers shared their expertise across 24 sectoral sessions aligned with Kerala’s Industrial Policy, ensuring that discussions focused on key growth areas.

 

The summit also fostered global collaboration, with over 100 international delegates participating in cross-border investment discussions. Additionally, Kerala engaged in five country event partnerships and hosted six dedicated country partner sessions featuring Germany, Australia, Vietnam, Norway, France, and Malaysia, strengthening global economic ties.

 

To facilitate concrete investment opportunities, the summit enabled one-on-one meetings with the chief minister and the industries minister, allowing direct engagement with leading industry stakeholders.

 

A key highlight of the Invest Kerala Global Summit 2025 was the overwhelming investor response, with over 410 expressions of interest (EoIs) amounting to ₹1.65 trillion in potential investments. This surpasses previously reported figures, demonstrating strong industry confidence in Kerala’s investment ecosystem. While EoIs signify strong investment interest, the state is actively working to maximise their conversion into actual investments. Through proactive policy measures, streamlined clearances, and dedicated investor facilitation, Kerala is committed to translating these commitments into tangible economic growth.

 

Communists are known worldwide for their stance against businesses. How is your Left Front government working to shed this image? 

I’m afraid you’re wrong. We have been at the forefront of enabling both public and private businesses to flourish, so that the society and the economy as a whole benefit.

 

When the first Communist Ministry came to power in Kerala in 1957, it was Comrade EMS Namboodiripad himself who invited Birla to set up industries in the state. It was the LDF government that established the country’s first IT Park, Technopark in Trivandrum, in 1990. Today, Kerala has three IT Parks, housing more than 1,100 companies.

 

In the past eight years, Kerala has seen the establishment of 6,200 startups with a total investment of ₹5,800 crore. According to the Global Startup Ecosystem Report, the state saw a 254 per cent growth in startups from July 2021 to December 2023.

 

To top it all off, India’s first Digital University has been set up in Kerala, and the country’s first Digital Science Park is also being developed in the state under our government’s leadership.

 

It is important to note that ours is not a socialist country and we operate within the framework of a Constitution that upholds a mixed economy. Staying true to that spirit, we do not see industry as either private or public — it is both. We are fostering an environment where both the private and public sectors can flourish. Here, the private sector thrives not at the expense of the public sector, which is being dismantled at the national level as the Union government vigorously pursues a policy of intensified liberalisation.

 

Currently, 121 public-sector enterprises are operational in Kerala. Over the past five years, their net turnover has increased from ₹33,000 crore to ₹45,000 crore, while their operating profit has risen from ₹4,400 crore to ₹8,750 crore. Today, 53 public-sector enterprises are running profitably.

 

The Year of Enterprises scheme, introduced by our government to facilitate MSME growth, has been recognised as a best practice in the sector. Over the past three years, nearly 350,000 MSMEs have been established in Kerala, attracting investments of more than ₹22,300 crore and creating around 740,000 employment opportunities.

 

You may recall that KELTRON, India’s first electronics manufacturing company, was set up in Kerala. The same KELTRON, along with several MSMEs registered in Kerala, played a role in the success of the Chandrayaan mission. I don’t have to underscore what a proud moment it was for our nation.

 

Under our government, Kerala has achieved Top Achiever status in the Business Reforms Action Plan, making it the easiest place to do business in. Our actions speak for themselves; they are backed by well-established facts and figures, which industry leaders fully recognise. This is precisely why Expressions of Interest (EoIs) poured in from all corners during the Invest Kerala Global Summit.

 

Critics argue that the practice of nokkukooli (a practice where some labour unions demand payment simply for permitting others to load or unload goods) still persists in certain parts of Kerala, despite the state government banning it. What is the current situation? 

I have no doubt that this practice has been done away with. If any isolated incidents occur, against the state government’s clear stance, those responsible will face strict legal action.

 

Recently, Congress leader Shashi Tharoor praised your government’s industrial policy. How do you take it? Was it a political statement or a genuine assessment by the Congress leader?

As I have already stated, the facts and figures speak for themselves. When the evidence is so clear, how can anyone say otherwise?

 

Foreign direct investment (FDI) in Kerala has remained modest, fluctuating between $0.2 billion and $0.3 billion annually since 2020. Do you foresee this changing in the near future?

 

Over the past four years, Kerala’s MSME ecosystem, startup landscape, and industrial policy have strengthened the state’s position as an attractive destination for FDI. As I have already mentioned, our MSME sector is thriving. Kerala ranks as a Top Performer in India’s startup ecosystem, with over 6,200 startups, 63 incubators, and more than 500 mini incubators. The state was ranked first in Asia for Affordable Talent (GSER 2022) and fourth globally. With an expanding digital and fintech ecosystem, AI-driven enterprises, and world-class incubators, Kerala has become a hotspot for venture capital, joint ventures, and foreign collaborations.

 

Kerala’s Industrial Policy focuses on high-value, technology-driven industries with minimal land requirements, covering 22 sectors and offering 18 incentives to attract global investors. It emphasises the expansion of Techno Parks, Food Parks, EV Parks, and sector-specific hubs while prioritising Electronics, Hi-Tech Manufacturing, and ESDM (Electronics System Design & Manufacturing) sectors. Additionally, the policy promotes Green Hydrogen Valley development and ESG-driven investments, ensuring sustainable industrial growth.

 

With a thriving MSME base, a global startup ecosystem, and an investor-friendly industrial policy, Kerala is emerging as a leading destination for FDI in IT, health care, tourism, manufacturing, EVs, biotech, and logistics. Strategic initiatives, such as the Invest Kerala Global Summit and proactive global engagements, will further facilitate investment inflows in the coming years, strengthening Kerala’s position as a prime destination for FDI.

 

An overwhelming share of your government’s expenditure is being taken away by revenue expenditure — almost 90 per cent for three consecutive years, including the revised estimates for 2024–25 and the Budget Estimates for 2025–26, while capital outlay has remained below 10 per cent. Does this worry you?

 

You have overlooked our most substantial initiative to ensure capital investments. Through the Kerala Infrastructure Investment Fund Board (KIIFB), we have undertaken infrastructure development projects worth nearly ₹90,000 crore in the state. This is entirely outside the Budget. Various sectors, including essential ones like education, health, and transport, as well as niche areas like R&D, have benefited from this.

 

What is actually concerning is the steady and continued decline in Kerala’s share of central taxes and grants. You may recall that the Finance Commission’s devolution to Kerala has dropped from 3.875 per cent during the 10th Finance Commission to just 1.925 per cent in the current 15th Finance Commission.

 

In 2020-21, Kerala’s own revenue stood at ₹54,988.15 crore, while our share of central taxes and grants was ₹42,628.68 crore. This meant that out of our total revenue of ₹97,616.83 crore, the state’s contribution was 56 per cent, and the Centre’s share was 44 per cent.

 

By 2023-24, the state’s own revenue had increased to ₹90,674.97 crore, but our share of central taxes and grants had dropped to just Rs 33,811.18 crore. As a result, in our total revenue of ₹1,24,486.15 crore, the state’s share rose to 73 per cent, while the Centre’s share was a paltry 27 per cent. This is certainly a major cause for concern.

 

This has also led to over 30 per cent of the sovereign debt-GSDP ratio for the past many years. How do you plan to reduce it? 

To reduce the debt-to-GSDP ratio, Kerala is focusing on increasing its GSDP by increasing investments. The promising response from the recently concluded Invest Kerala Global Summit gives us confidence that investments will multiply. The recently concluded State Conference of the CPI(M) has approved a policy document titled Nava Keralathinulla Puthuvazhikal, which explores pathways for transforming Kerala into a developed society. This, in turn, will further drive GSDP growth.

 

As far as Kerala’s debt figures go, the Union government is wrongly considering the borrowings of KIIFB and Kerala Social Security Pension Limited (KSSPL) as part of the state government’s debt. The Constitution is being misinterpreted to impose financial restrictions on our state government, which are not applied to the Union government. For example, the loans availed by the National Highways Authority of India (NHAI) are never considered part of the Union government’s general debt.

 

We have approached the Supreme Court against the Union government’s discriminatory stance, as it has broader constitutional implications. One key issue is states’ fiscal autonomy, and the other concerns Centre-state relations in general. The Supreme Court has rightly referred the matter to its Constitution Bench.

 

While Kerala is known for its progress in social parameters, you have yourself expressed concerns that crimes against women continue to occur in the state. How do you plan to eliminate such incidents or at least make them rare?

  On one hand, we are taking a tough stance on crimes against women, ensuring quick action even against the high and mighty. On the other hand, we are taking additional measures to ensure their security and welfare.

 

We have set up a dedicated Department for Women and Children. Kerala is the only state with a Gender Budget, which accounts for 20.8 per cent of our total plan outlay. Initiatives, such as Pink Patrol and Ente Koodu, have been designed to ensure women's safety.

 

Above all, we are intervening right from school curriculum to educate students and create awareness among the general public about women's autonomy over their bodies and minds. We should not be oblivious to the fact that in Kerala, every crime against women gets registered, unlike in many other parts of the country. Even with regard to conviction rates, we are at the top. These underscore how women-friendly the state actually is.

 

How do you justify your government’s continued engagement with the Adani group, particularly in the Vizhinjam Port project, despite the group facing multiple corruption-related proceedings in the US?

 

Vizhinjam Port is a transformative infrastructure project that positions Kerala as a key player in global maritime trade and logistics. As India’s first deep-water container transshipment port, it ensures direct access to international shipping routes, significantly reducing logistics costs and enhancing supply chain efficiency. Strategically located just 10 nautical miles from the international shipping lane, the port is designed to handle Ultra Large Container Ships (ULCS), making it one of the most competitive maritime hubs in the region. It has been built at a naturally gifted location, which has a deep draft of around 20 meters, and, hence, required no capital dredging. 

The state government is committed to leveraging Vizhinjam’s potential to attract industries, boost exports, and create a seamless trade ecosystem. Initiatives such as industrial townships and multimodal logistics connectivity — integrating the port with highways, rail, and air transport — are aimed at strengthening Kerala’s position as a global logistics gateway. With the commencement of MSC’s (Mediterranean Shipping Company) operations, Vizhinjam is set to become a major transshipment hub, driving economic growth and opening up new opportunities for industries and businesses.

 

As far as the Kerala government is concerned, we are working overtime to ensure that the Vizhinjam Port is completed and fully operational by 2028, well ahead of the original schedule. Rest assured, both the Kerala government and Vizhinjam International Seaport Ltd remain transparent and accountable.

 

How do you assess the Left Front’s prospects in next year’s state elections? Are you hopeful that your coalition will score a hat-trick victory, despite the general trend —except in the last election — of voters preferring a change of government in every poll? 

We are confident of a handsome victory. We have been able to reach out to the masses in every possible way, and their response is overwhelming. Our vote base has also extended to hitherto untouched sections and areas as a result of the welfare activities and the developmental activities pursued by our government over the last nine years. We have the best law and order situation in the country and have not had a single instance of communal violence under our guard.

 

We have the most industry- and investment-friendly atmosphere in the country. So far, the people of Kerala have appreciated our corruption-free governance, which is driven by a commitment to development and welfare, while upholding India’s constitutional values, including secularism and federalism. To the discerning public, I would say that their choice for the future is clear.