Kerala’s Chief Minister V. D. Satheesan revealed that the state may encounter a fiscal deficit of around Rs 20,500 crore this financial year. This shortfall stems from the absence of expected revenue deficit grants from the Centre, as projected in the 2026-27 Interim Budget.
Satheesan criticized the previous Left Democratic Front (LDF) government’s budget assumptions, highlighting a discrepancy of Rs 14,138 crore in projected revenue deficit grants. The 16th Finance Commission did not allocate any such grants to Kerala, leading to a significant gap in the state’s budget expectations.
The missing grant poses a substantial challenge to Kerala’s financial stability, potentially impacting the state’s expenditure commitments. Satheesan emphasized the need for corrective measures to address the fiscal crisis and ensure financial stability for the state.
The White Paper presented by Satheesan in the Assembly disclosed that the new government inherited pending obligations totaling Rs 48,733 crore as of March 31, 2026. These obligations include various arrears and pending commitments, necessitating strategic financial management to navigate the state’s economic challenges.
