Kerala undergoes severe economic crisis; Current allocations halved ahead of upcoming budget

Thiruvananthapuram: Ahead of the 2025-26 budget being prepared by Finance Minister K N Balagopal, the government is implementing a major reduction in the current budget's project allocations, cutting them by 50 percent due to the ongoing severe economic crisis. 

The Cabinet's decision has led to government departments, under the guidance of a committee led by the Chief Secretary, issuing orders to cut expenses. While most of the 52 government departments have completed this process, a few are still in the midst of it.

In August this year, the government decided to save funds by reducing project costs so as to resume the halted benefits for government employees and backward categories instead. The reduction applies to all departments, with the exception of salaries and pensions, resulting in a 50 percent cut in project costs.

This drastic measure is unprecedented, significantly impacting many welfare schemes thus highlighting the gravity of the situation.

As of now, only 40 percent of the annual plan allocation has been spent, with just three months remaining in the financial year. Given the 50 percent cap, it is unlikely that expenditures will increase substantially in the final quarter. 

The total expenditure for the current year's annual plan was set at Rs 38,886 crore, covering both local government bodies and Central government schemes. The Planning Board will decide on the project outlay for the next year ahead of the budget preparation process.