Satheesan-led UDF govt's first Budget: Expectations high as state faces financial pressure

Thiruvananthapuram: The first Budget of the Chief Minister V. D. Satheesan-led UDF government is set to be presented on Friday. Satheesan, who also holds the Finance portfolio, is expected to outline the administration's priorities amid what he has described as one of the state's most difficult financial situations.

The Budget comes nearly two weeks after the government tabled a white paper on Kerala's finances. It highlighted mounting debt, unpaid liabilities and shrinking fiscal space. Since assuming office on May 18, the UDF government has repeatedly stated that it is operating under severe financial constraints and must identify new sources of revenue to fulfil its promises.

Core focus: 5 Indira Guarantees

The Budget is being keenly watched to see whether it includes provisions for the five Indira Guarantees promised by the UDF during the Assembly election campaign. The government has already launched the first phase of free bus travel for women.

The remaining guarantees include monthly assistance of ₹1,000 for college-going girl students and health insurance coverage of up to ₹25 lakh per family under the proposed Oommen Chandy Health Insurance Scheme. The UDF has also promised interest-free loans of up to ₹5 lakh for young entrepreneurs and small businesses to encourage self-employment.

Another major commitment made during the election campaign by Congress leader Rahul Gandhi was to increase the social welfare pension to ₹3,000 per month.

V. D. Satheesan on financial hurdles

Speaking ahead of the Budget on Wednesday, the Chief Minister said he faces the challenge of arranging an additional ₹20,500 crore to implement a plan worth around ₹35,000 crore outlined in the Budget presented by the previous LDF government in January.

Calling the challenge "almost a miracle", the Chief Minister said the government would need to find substantial additional resources to ensure that its planned development projects move forward. He also pointed to a significant shortfall in the revenue projected by the previous government, further intensifying the state's financial pressures.

According to the white paper, Kerala's liabilities have crossed ₹5 lakh crore, while pending payments are nearing ₹49,000 crore. It notes that salaries, pensions and interest payments account for a major share of government expenditure, leaving limited fiscal space for fresh investments in infrastructure and development.

The Budget is also expected to address the future of the Kerala Infrastructure Investment Fund Board (KIIFB), which the white paper says is in need of major restructuring. The agency currently faces liabilities of around ₹21,000 crore and has projects worth nearly ₹35,000 crore awaiting financial support.

Opposition CPM's stance

The opposition CPM, however, has strongly contested the government's assessment of the state's finances.

Former Finance Minister K. N. Balagopal has maintained that Kerala's financial position remains fundamentally strong and that there is no need to reduce welfare or development spending. He has argued that tax revenues are improving and urged the government to press the Centre for the release of the revenue deficit grant instead of scaling back public expenditure.

As the UDF government attempts to chart a development path different from that of the previous LDF administration, all eyes will be on Friday's Budget to see how it balances fiscal responsibility with welfare commitments and growth objectives.

With PTI inputs