Kerala Chief Minister VD Satheesan will present the first Budget of the newly-elected United Democratic Front government on Friday. The exercise comes at a moment of acute fiscal stress, with the state carrying over Rs 5 lakh crore in outstanding liabilities and pending payments of nearly Rs 49,000 crore.
Satheesan, who also holds the Finance portfolio, has repeatedly described the state’s financial situation as one of the most difficult Kerala has faced.
The Budget follows a white paper on state finances tabled by the government two weeks ago. The document painted a stark picture of mounting debt, shrinking fiscal space and unpaid liabilities. It noted that salaries, pensions and interest payments consume the bulk of government revenues, leaving little room for development spending.
Speaking ahead of the Budget on Wednesday, Satheesan said the government needs to mobilise an additional Rs 20,500 crore to implement a development plan worth around Rs 35,000 crore.
The plan was originally set out in the Budget presented by the previous Left government in January. He described the task as “almost a miracle”. A significant shortfall in projected revenue from the previous Budget has added to the pressure, he said.
The UDF government was sworn in on May 18. Friday’s Budget will be its first major policy statement.
Five Indira Guarantees
Central to the Budget’s reception will be whether it moves toward fulfilling the five Indira Guarantees promised by the UDF during the Assembly election campaign. The government has already initiated the first phase of free bus travel for women. The remaining commitments are yet to be funded.
These include a monthly assistance of Rs 1,000 for college-going girl students and health insurance coverage of up to Rs 25 lakh per family under the proposed Oommen Chandy Health Insurance Scheme.
The guarantees also cover interest-free loans of up to Rs 5 lakh for young entrepreneurs and small businesses. During the election campaign, senior Congress leader Rahul Gandhi had separately promised to raise the social welfare pension for senior citizens and the vulnerable to Rs 3,000 per month.
KIIFB’s loan liabilities
The future of the Kerala Infrastructure Investment Fund Board is another issue expected to feature in the Budget. The white paper flagged KIIFB’s loan liabilities of around Rs 21,000 crore, with Rs 35,000 crore worth of projects still awaiting funding. It called for major restructuring of the institution.
The opposition CPI(M) has contested the government’s reading of the state’s finances. Former Finance Minister KN Balagopal argued that Kerala’s fiscal position remains fundamentally sound. He said tax collections are improving and urged the government to press the Centre for the release of the revenue deficit grant rather than pare back public spending.
Satheesan’s logistics bet
Kerala CM Satheesan has previously made it clear that the Budget will prioritise only those projects that are financially viable and capable of being executed.
He also outlined an ambitious vision of transforming Kerala into a logistics and port-led economy by integrating the state’s two major ports, Kochi and Vizhinjam, with its four international airports at Kochi, Thiruvananthapuram, Kozhikode and Kannur.
The Budget is expected to unveil initial measures aimed at advancing this connectivity-driven strategy.