Thiruvananthapuram: The first Budget of the new Kerala government, to be presented by Chief Minister and Finance Minister V.D. Satheesan on June 19, is expected to focus on a major course correction for Kerala’s finances after a White Paper exposed serious gaps between earlier budget projections and the state’s actual fiscal position.
With the government facing an estimated shortfall of nearly Rs 20,500 crore in Central fund transfers this financial year, CM Satheesan’s maiden Budget is likely to spell out a road map for fiscal consolidation, improved revenue mobilisation and tighter expenditure management.
The White Paper released by the Kerala government states that serious flaws in earlier budget estimates, particularly relating to Union government assistance, had contributed to the present financial stress.
It points out that the 2026-27 Interim Budget presented by the previous LDF government was based on incorrect assumptions regarding Revenue Deficit Grants and the Centre’s share of tax devolution.
The Interim Budget had projected Rs 14,138 crore as Revenue Deficit Grant. However, the 16th Finance Commission has not made such an award, creating a major gap in the state’s expected revenue flow.
This has resulted in a severe financial challenge for the new administration, according to the report. In the introduction to the White Paper, CM Satheesan said the purpose was not simply to criticise previous governments but to place before the people the real financial situation of the state and identify the way forward.
He said Kerala needed an accurate diagnosis of its fiscal problems along with collective participation in implementing reforms to strengthen the state’s economic foundation.
The report proposes strict fiscal discipline, reduction of avoidable expenditure, strengthening of revenue collection and institutional reforms in financial management.
The government has indicated that spending will be reviewed carefully while ensuring that development priorities, social welfare and public investment are protected.
CM Satheesan has also stressed that transparency in financial management is essential and that public resources must be managed with accountability and responsibility.
The White Paper was prepared based on detailed data and analysis from the Finance Department by an expert committee headed by former Union Cabinet Secretary K.M. Chandrasekhar.
The Centre for Development Studies (CDS) facilitated the committee’s deliberations.
The immediate challenge before CM Satheesan will be to convert the findings of the White Paper into policy decisions when he presents the Budget.
The financial statement is expected to announce the government’s corrective measures, including changes required to stabilise Kerala’s finances and create a sustainable growth path.
(IANS)
