This report was published in The New Indian Express on 19.01.2024
The capital expenditure (capex) of Kerala has increased by 142% over the last seven years, from Rs 10,126 crore in 2016-17 to Rs 24,606 crore in 2023-24.
Despite financial constraints, Kerala’s capital expenditure as a percentage of total expenditure has touched an all-time high of 13.97% in 2023-24, from a mere 7.65% in 2016-17, reflecting robust economic activity that could have multiplier effects in terms of income generation and job creation in coming years.
As per the latest statistics provided by the State Planning Board, the capital expenditure (capex) of Kerala has increased by 142% over the last seven years, from Rs 10,126 crore in 2016-17 to Rs 24,606 crore in 2023-24. Further, the capex- to-state gross domestic product (SGDP) ratio, which was 1.64% in 2016-17, increased to 2.17% in 2023-24, reaching a peak in 2021-22 at 2.49%.
“Our investment in infrastructure is very high in Kerala as a proportion to total expenditure and as a proportion to state domestic product. And as this keeps increasing, the multiplier effect will be very high,” said Dr K Raviraman, member, Kerala State Planning Board (KSPB), who shared the data.
The multiplier effect will turn into income in the hands of the people and the government, he said. “We have been investing in industries. About 15% of our total expenditure goes into industries. Around 10-12% of our total investment goes into agriculture. Further, more than 50% is invested in human resources,” said Raviraman.
He said the capital expenditures have not been just in roads and bridges, but also in other key sectors including water navigation (West Coast Canal, Water Metro etc), telecommunications (K-FON), ports (Vizhinjam), and Kochi Metro Rail to name a few.
Krishnakumar K K, senior fellow at Centre for Socio-economic and Environmental Studies (CSES) said the infrastructure of schools and hospitals have been upgraded tremendously in the last few years. Further, Kerala government has also provided 25% of land acquisition cost on the National Highway projects, which has speeded up their work.
“All this will have multiplier effects on the economy,” he said.
“A big drawback that’s being pointed out for Kerala has been the lack of capital formation,” said Krishnakumar, pointing out that Central government’s funding for education (Samagra Shiksha Abhiyan) and health (National Health Mission) is meant for new schools and hospitals.
“We have enough schools and hospitals, especially when compared to the all-India average. What we require is funds to upgrade the facilities in schools and hospitals. But, we cannot find funds through these schemes,” said Krishnakumar.
“So, Kerala is missing out on all these flagship schemes of the Central government,” he said, adding that the off-budget borrowing and investment by KIIFB has helped the state overcome these constraints to a certain extent in the last few years.
The high jump
- Kerala capex is up 142% in last 7 years, from Rs 10,126 cr in 2016-17 to Rs 24,606 crore in 2023-24.
- Capex to SGDP ratio, which was 1.64 % in 2016-17, increased to 2.17% in 2023-24, reaching a peak in 2021-22 at 2.49 %
- Capex to total expenditure is at an all-time high at 13.97 % in 2023-24 vs 7.65% in 2016-17