Sri Lankan economic crisis is a lesson for India: Kerala Finance Minister Balagopal

The economic crisis in neighbouring Sri Lanka is a result of its aggressive globalisation policy and it is a lesson for India which is also following a similar policy, Kerala Finance Minister K N Balagopal said on Tuesday.

Urging the central government to take measures to fix the problems in the Indian economy, Balagopal, who has been critical of various policies of the BJP-led central government, said the Centre was moving into a "danger zone" as more than half of the total Union budget comes from borrowing and not much investments are being made in productive sectors.

The finance minister, part of the Left Democratic Front which swept to power for the second straight term last year, also dismissed allegations that the ambitious semi-high speed rail project, SilverLine, could adversely impact Kerala's economy. The project is at the centre of an escalating political controversy with Opposition parties protesting against it.

Also Read | Explained: What is the economic crisis in Sri Lanka?

Blaming the blind following of globalisation policy for the crisis in Sri Lanka, Balagopal said the governments there focused fully on the foreign income generating sectors like tourism and ignored the primary sectors like agriculture resulting the heavy fall of economy during the Covid-19 pandemic.

"People are fleeing the island nation not because of war or internal conflict but due to abject poverty. The governments there completely ignored the sectors like food production and gave their full attention in generating foreign money through the sectors like tourism. But the Covid-19 pandemic caused the collapse of the tourism sector pushing the country into a severe crisis," the minister told PTI.

He noted that the budget size of the central government is more than Rs 39 lakh crore and out of the total amount, over Rs 17 lakh crore was generated through borrowings, which is 45 per cent of the budget size.

Also Read | Sri Lanka economic crisis: The way out won't be painless

"Besides, the Centre is in the process of disinvesting its assets like LIC for generating Rs 75,000 crore". "The total expenditure of Kerala is rupees one and a half lakh crore. Out of this, Rs 30,000 crore is the total borrowing. The state was forced to go for borrowing after the centre refused to give its due which is also Rs 30,000 crore," Balagopal said.

He said while the state is borrowing only 3.4 per cent from its permissible limit of four per cent, the centre's borrowing is 6.9 per cent, which is not a good sign. "This is an indication that the Centre is moving to the danger zone. In this context, we should analyse the Sri Lankan crisis. The Government of India borrows more than half of its total budget. It is not collecting the tax properly. The centre is also not investing more money in the production sectors," Balagopal claimed.

He dismissed allegations that Kerala will also face similar crisis if it goes ahead with the multi-crore SilverLine semi-high speed railway project by borrowing huge money from international money lenders, saying the southern state's economy is intact and it has never crossed its permissible borrowing limits.

According to him, Kerala has allocated a lot of money for boosting its capital investment. "Enough funds have been allocated in the key sectors like agriculture, industries and higher education," he said, adding that the state's economy is a safer zone as it has given full attention in the primary sectors for producing food for the people.

"Kerala has become self-sufficient in the milk production. It will soon achieve self-sufficiency in meat, fish and vegetable production", the minister said. He, however, admitted that there was a gap in the production of paddy and said effective steps would be taken to boost production of such essential items too.

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