Thiruvananthapuram

The first Budget of the newly elected UDF government will be presented on Friday, with Chief Minister V D Satheesan, who also oversees the Finance Department, expected to unveil the administration’s roadmap amid a challenging financial backdrop.

The Budget assumes added significance as it comes shortly after the government released a white paper detailing the state's financial condition, highlighting rising debt levels, pending liabilities, and limited fiscal flexibility.

Since assuming office on May 18, Satheesan has repeatedly underlined the severity of Kerala’s financial constraints, stressing the need to generate additional resources to implement the government’s commitments and development agenda.

A key focus will be whether the Budget incorporates any of the UDF’s much-publicised Indira Guarantees, announced during the Assembly election campaign. The government has already launched the first phase of its promise of free bus travel for women.

The remaining guarantees include a monthly scholarship of Rs 1,000 for female college students, health insurance coverage of up to Rs 25 lakh per family under the proposed Oommen Chandy Health Insurance Scheme, and interest-free loans of up to Rs 5 lakh for young entrepreneurs and small businesses.

Another major commitment made during the campaign by Congress leader Rahul Gandhi was increasing the monthly social welfare pension to Rs 3,000.

Ahead of the Budget, the chief minister acknowledged the enormity of the task before the government. He said the administration would need to mobilise an additional Rs 20,500 crore to execute projects worth nearly Rs 35,000 crore that were included in the Budget presented by the previous Left government in January.

Calling the challenge “almost a miracle,” Satheesan said substantial resource mobilisation would be necessary to keep planned development projects on track.

The government has also pointed to a significant gap between the revenue projections made by the previous administration and the actual collections, further complicating the fiscal situation.

According to the white paper, Kerala’s outstanding liabilities have crossed Rs 5 lakh crore, while unpaid commitments are estimated at nearly Rs 49,000 crore. It notes that a large share of government revenue is absorbed by salaries, pensions, and interest payments, leaving little room for fresh investments.

The future of the Kerala Infrastructure Investment Fund Board (KIIFB) is also expected to feature prominently in the Budget. The government’s assessment suggests that the institution requires extensive restructuring, citing loan obligations of around Rs 21,000 crore and projects worth another Rs 35,000 crore awaiting financial support.

The opposition CPI(M), however, has disputed the government's assessment of the state's finances. Former Finance Minister K N Balagopal has argued that Kerala’s fiscal position remains stable and that welfare and development programmes should not be curtailed.

Balagopal has maintained that tax revenues are showing healthy growth and has urged the state government to focus on securing pending revenue deficit grants from the Centre rather than reducing expenditure.

READ MORE: Home Chef Maliha Baig brings secret Hyderabadi recipies to the table

As the UDF seeks to chart a distinct development path while managing fiscal pressures, Friday’s Budget is expected to reveal how the government intends to balance welfare commitments, infrastructure spending, and financial prudence.