Chief Minister V D Satheesan will present the revised Kerala Budget for 2026–27 on Friday, as the first Congress chief minister to hold the finance portfolio and present a budget since R Shankar and Oommen Chandy. This historic milestone for the newly-elected United Democratic Front (UDF) government requires a tightrope walk between fulfilling high-profile election manifestos and addressing severe structural fiscal deficits.
This first budget from the UDF government closely follows the Finance Department’s release of a white paper assessing the state’s financial health as extremely poor. Therefore, strategic announcements to increase tax and non-tax revenues and to receive central allocations correctly are also expected in Friday’s budget.
The upcoming budget will overhaul the state’s primary revenue streams, focusing on internal taxes, non-tax revenues, and the central tax share. Following the implementation of GST, the state faces limited options for generating independent tax revenue. Because existing levies on fuel, land, liquor, and electricity are already squeezing citizens, Friday’s announcements will avoid placing additional financial burdens on the public. However, severe treasury constraints mean few populist measures are expected.
The budget is likely to target widespread GST evasion across both large and small industries, substantially boosting state tax revenue. Additionally, it is expected to include a strong political stance urging the Central government to grant Kerala its rightful share of Finance Commission funds, central grants, personal income tax, and import duties.
The financial sector anticipates that the Satheesan government’s inaugural budget will heavily restructure the Kerala Infrastructure Investment Fund Board (KIIFB) .Indications suggest that KIIFB will lose its independent status as a primary driver of state development and instead be transformed into a streamlined fundraising entity. Furthermore, the Finance Department is expected to take absolute control over its operations.
The reorganization of KIIFB will be based on the recommendations of the expert committee appointed by the government to study the state’s finances immediately after it came to power. The expert committee pointed out that KIIFB was borrowing money from the market at an interest rate one to one and a half percent higher than the government’s borrowing from the public market, which indicates a serious lack of financial discipline.