Kerala finance minister KN Balagopal termed the Union Budget presented by finance minister Nirmala Sitharaman on Sunday as “very disappointing” for the State, as most of its key demands remain unfulfilled. He however said that the marginal increase in Kerala’s share in the divisible tax pool from 1.92% to 2.38% under the 16th Finance Commission was welcome.
“The increase in Kerala’s share in the tax pool will be good for the state. It is a result of our collective hardwork. We had demanded 2.79%. But still the increase will benefit us. Even the finance commission had said that we did very well in submitting all the data and documents. But the downside is that as part of the commission’s grants, we will not be getting the revenue deficit grant anymore. In fact, no state will get it. We had even submitted a special memorandum for the revenue deficit grant,” he told reporters in Kollam.
Kerala’s share of the divisible pool has steadily declined from 3.88% under the 10th Commission to 1.92% under the 15th Commission. At the same time, the state’s demand to raise the tax share of states in the divisible tax pool from the current 41% to 50% was not accepted under the 16th Comission.
“In 2021 when we came to power for the second time in the state, we got GST compensation of ₹12,000 crore. It however stopped after two years. We, along with some Congress-ruled states, have demanded the resumption of GST compensation,” he said.
{{/usCountry}}“In 2021 when we came to power for the second time in the state, we got GST compensation of ₹12,000 crore. It however stopped after two years. We, along with some Congress-ruled states, have demanded the resumption of GST compensation,” he said.
{{/usCountry}}The minister said that the budget ignored long-pending demands of the State for an AIIMS hospital and a high-speed rail project.
“Does Kerala not deserve an AIIMS? We also expected some announcements around the Vizhinjam port, especially a dedicated freight corridor. The Vizhinjam port is important to India, not just Kerala. But there was no word on it,” he said.
“We had asked for a ₹21000 crore special package (for fiscal correction). It wasn’t given. Even the Sabari rail project wasn’t approved.”
He said that the 2026-27 budget cut the allocation for the VB G-RAM-G project, or the rural jobs scheme, from last year’s ₹88,000 crore to just ₹30,000 crore. “This will severely affect all states. Poor people in rural areas who benefit from the scheme to buy food and medicine will struggle now,” he said.
Kerala chief minister Pinarayi Vijayan said that the Budget presented today “reveals the Union government’s continued discrimination and neglect towards Kerala.”
“Finance minister Nirmala Sitharaman has deliberately forgotten that Kerala is also on the map of India. The state’s long pending demands for an AIIMS, a high-speed rail corridor and a special package for Vizhinjam port have been completely ignored. The Union ministers from Kerala must answer,” said Vijayan.
The budget is based on a neoliberal economic logic and designed to enrich corporates and push ordinary people further into poverty, he claimed.
“For the state, there has been a huge cut in grants overall. Grants which amounted to ₹2.2 lakh crore in 2021 have now come down to ₹1.4 lakh crore. The small increase in the tax revenue is the state’s right, given the progress Kerala has made in populaton control and domestic revenue growth,” he said.
Thiruvananthapuram MP and senior Congress leader Shashi Tharoor criticised the Union budget for its glaring omission of Kerala on various fronts including health, coastal protection and railways.
He said the “glaring exclusion” of Kerala from the project to develop seven high-speed rail corridors was indefensible. “We are a high-density state crying out for modern transit. The Centre ignores us and the State proposes paper projects it cannot afford. Our commuters are left with nothing. We need actual trains, not new acronyms,” he wrote on social platforms.
Tharoor also said that the budget gave “zero allocation for last-mile connectivity” of the Vizhinjam port and has maintained a “deafening silence” on a AIIMS hospital.