State government "experimenting within constraints" as it pivots towards economic growth with social justice
Madurai, April 5 — With the 2026 Assembly elections on the horizon, the CPI(M)-led Left Democratic Front (LDF) in Kerala is pushing forward its ‘Nava Kerala’ vision—a developmental roadmap balancing economic progress with social justice. Kerala’s Local Self Government Minister MB Rajesh, in an interview, emphasized that the state is undertaking bold experiments in governance and investment despite fiscal constraints imposed by the BJP-led central government.Devolution of Funds Slashed, Borrowing Limits Tightened
Minister Rajesh asserted that Kerala's financial freedom has been significantly curtailed. "The devolution from the Finance Commission has reduced, and our borrowing is restricted," he said. He pointed out that Kerala’s entitlement under the FRBM Act permits borrowing up to 3% of the state’s GDP, but the Centre allows only 2.5%, calling the cap unjustified."The devolution has dropped from 3.92% to 1.92% between the 10th and 15th Finance Commissions. This reduction penalizes states like Kerala that have made significant advances in health, education, and population control," he added.
Rebutting Internal and External Criticism
Facing criticism from within CPI(M) for welcoming private universities and inviting private investment into public sector units (PSUs), Rajesh denied that the party is straying from its core ideology.“We have first strengthened public universities and PSUs. Allowing private universities is not a replacement but a supplement to expand opportunities in higher education,” he clarified. “Safeguards are in place to ensure regulation and accountability.”
Rajesh also defended the state’s approach to PSUs, stating that many have become profitable due to LDF's support. “We even took over KPPL (formerly Hindustan Investment Limited), which was being sold off by the Centre. That’s our commitment to the public sector,” he said.
Reimagining the Kerala Model
Recalling the legacy of Kerala's first communist government in 1957—which introduced pioneering land and educational reforms—Rajesh said the state's celebrated human development model must now evolve to address economic realities."By the 1990s, we understood that while our social indicators were impressive, economic growth needed rejuvenation. We’re now focusing on infrastructure, welfare schemes, and investments to sustain our social progress,” he explained.
Highlighting key initiatives, Rajesh noted investments in highways, schools, hospitals, the Water Metro, Digital Science Park, and a Digital University—all undertaken without compromising on welfare commitments.
Kerala Aims to Eradicate Extreme Poverty by November 2025
In a major social goal, Rajesh declared that Kerala is on track to become the first Indian state to completely eradicate extreme poverty by November 1, 2025. “We are also the first state to implement an urban employment guarantee scheme and offer an additional 100 days of work under MGNREGS,” he added.Dismissing Centre’s Fiscal Crisis Claims
Responding to Union Finance Minister Nirmala Sitharaman’s accusation that Kerala’s fiscal crisis stems from "reckless policies" by successive LDF and UDF governments, Rajesh called the statement politically motivated.“Our policies are not reckless. We are experimenting within the limits imposed on us. We are not succumbing to neo-liberal pressures but seeking alternatives to sustain our development model,” he said.
Outlook
As Kerala braces for the 2026 Assembly elections, the LDF’s ‘Nava Kerala’ strategy—marked by its hybrid approach of social welfare, infrastructure investment, and regulated private participation—will likely remain at the center of political discourse. Rajesh’s remarks signal a government determined to navigate fiscal hurdles while preserving its ideological foundations.
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