Kerala Planning Board vice chairman V K Ramachandran's assessment of Kerala's fiscal health differs sharply from the triumphant tone adopted by Finance Minister K N Balagopal in his Budget Speech on January 29. 

"Nobody can say that there was a decline in the developmental expenditure in any Legislative Constituency in the State. Same is the case of government departments. It is in this context that we reiterate that Kerala has created a 'new normal' in all regions and all departments," Balagopal said in his speech.

The Planning Board vice chairman did not share this sentiment. "We have not been able to finish our plans because we have insufficient funds," Ramachandran told reporters on Friday. He also used the term 'crisis'. "We have a crisis. There are many things we have not been able to complete," he said.

Nonetheless, Ramachandran argued that this fiscal crunch was part of a larger crisis all the states in the country were facing as a consequence of the Centre's attempts to usurp the country's revenues more for itself. "Even then, in the last 10 years, there is no other state that has transformed as much as Kerala," the vice chairman said.

He also sought to dispel the notion, fanned by opposition leader V D Satheesan, that Kerala's plan size has shrivelled during the current 14th Five-Year Plan period. "In actual terms, the plan size has not fallen," Ramachandran said. 

He said that during his predecessor's (Prabhat Patnaik) tenure, the plan size had increased 20 per cent every year. "We have not had that kind of increase," he said. 

Then, during the 2006-11 period when V S Achuthanandan was Chief Minister and Prabhat Patnaik was vice chairman of the Planning Board, Ramachandran said the economic condition and the centre-state financial relations "were completely different." 

There was yet another reason Ramachandran cited for the torpor that has overcome Kerala's plan size. "We have created new institutions for infrastructure development such as KIIFB," he said, a clear hint that a substantial portion of plan-related work has been transferred to KIIFB. 

However, the Planning Board vice chairman's assertion that Kerala's plan size had not fallen in real terms is not fully right. In 2022-23, the first year of the 14th Five-Year Plan, the plan size was ₹37,242 crore. For 2026-27, the last year of the 14th Five-Year Plan, it is estimated to be just ₹35,750 crore, a fall of nearly ₹1500 crore. 

But in between, during 2023-24 and 2024-25, there has been, as suggested by Ramachandran, a marginal increase in plan size. In 2023-24, it was ₹38,715 crore, a 3.9 per cent increase from the previous fiscal. In 2024.25, it was ₹41,288 crore, a 6.6 per cent increase.    

The plan size for the ongoing 2025-26 fiscal shows a 17 per cent increase but these are figures yet to be vetted by the Comptroller and Auditor General. At this stage, with just one-and-a-half months left for the end of the fiscal, the state plan utilisation is just 49.34 per cent. Finally when the audited accounts are submitted, the plan size would have grown by around just 2-3 per cent, and not by the ambitious 17 per cent documented in the Budget figures.

The Planning Board vice chairman also argued that a below par increase in plan size did not mean that planning had become obsolete. "The importance of planning in setting the priorities for a particular year is very crucial. One year, we had set higher education as priority. Next year it was industry. Then another year, the priority was elderly, culture and persons with disabilities," the vice chairman said, and added: "Allocating money based on public discussions is the essence of planning. In Kerala, the role of planning in allocating resources for priority areas based on public discussion has not come down."

Ramachandran said that capital expenditure had fallen in states that had dismantled planning boards.