Kerala Finance Minister KN Balagopal on Sunday termed the Union Budget presented by Finance Minister Nirmala Sitharaman as “very disappointing” for the state, as most of its key demands remain unfulfilled. He, however, said that Kerala’s share in the divisible tax pool from 1.92% to 2.38% under the 16th Finance Commission was welcome.
Kerala’s core demands remain unfulfilled, says the state’s finance minister”Increasing Kerala’s share in the tax pool will be good for the state. This is the result of our collective efforts. We had demanded 2.79%. But still this increase will benefit us. Even the Finance Commission said that we have done very well in submitting all the data and documents. But the downside is that as part of the commission’s grant, we will not get any more revenue, there will be no deficit in the state. We even submitted a special memorandum for 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 states’ demand to increase the states’ tax share in the divisible tax pool from the current 41% to 50% under the 16th Commission was not accepted.
“When we came to power for the second time in the state in 2021, we got GST compensation. ₹12,000 crores. However, it was discontinued after two years. We, along with some Congress-ruled states, have demanded the reintroduction of GST compensation,” he said.
The minister said the budget ignored the state’s long-pending demands for an AIIMS hospital and a high-speed rail project.
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“Doesn’t Kerala deserve an AIIMS? We also expected some announcements around Vizhinjam port, especially a dedicated freight corridor. Vizhinjam port is important not just for Kerala but for India. But there was no word about it,” he said.
“We wanted one ₹21000 crore special package (for fiscal reforms). It is not given. Even the Sabari rail project has not been sanctioned.”
He said that the allocation for the VB G-RAM-G scheme or rural employment scheme in the 2026-27 budget has been reduced from last year. ₹88,000 crores only ₹30,000 crores. “This will affect all the states severely. Poor people in rural areas who benefit from the scheme to buy food and medicine will now struggle,” he said.
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Kerala Chief Minister Pinarayi Vijayan said the budget presented today “reveals the central government’s continued discrimination and neglect towards Kerala.”
“Finance Minister Nirmala Sitharaman has deliberately forgotten that Kerala is also on India’s map. The state’s long-pending demands for an AIIMS, a high-speed rail corridor and a special package for the Vizhinjam port have been completely ignored. Kerala’s Union ministers must answer,” said Vijaya.
The budget is based on a neoliberal economic logic and is designed to enrich corporates and push ordinary people further into poverty, he claims.
“For the state, there has been a huge cut in grants overall ₹2.2 lakh crore in 2021 now ₹1.4 lakh crore. Given the progress Kerala has made in controlling population and increasing internal revenue, a modest increase in tax revenue is the right of the state,” he said.
Thiruvananthapuram MP and senior Congress leader Shashi Tharoor criticized the Union Budget for clearly excluding Kerala on various fronts, including health, coastal protection and railways.
He said Kerala’s “out of touch” from the project to develop seven high-speed rail corridors was inexcusable. “We are a high-density state crying out for modern transit. The Center ignores us and the state proposes paper projects that it cannot afford. Our commuters are left with nothing. We need real trains, not new acronyms,” he wrote on the social platform.
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Tharoor also said the budget gave “zero allocation for last-mile connectivity” to the Vizhinjam port and maintained a “deafening silence” on an AIIMS hospital.
