Kerala Chief Minister VD Satheesan, state Assembly Speaker Thiruvanchoor Radhakrishnan and state Assembly LoP Pinarayi Vijayan during an orientation programme for legislators, in Thiruvananthapuram, Wednesday, June 17, 2026.

The stage is set for the presentation of the first Budget of the UDF government on Friday, with Chief Minister V D Satheesan, who also holds the Finance portfolio, expected to outline his administration's priorities while navigating what he has described as one of the state's most difficult fiscal situations.

The revised Budget comes nearly two weeks after the government tabled a white paper on Kerala's finances, painting a grim picture of mounting debt, unpaid liabilities and shrinking fiscal space.

Against this backdrop, Satheesan, whose UDF government was sworn in on May 18, has repeatedly said the administration is operating under severe financial constraints and must find fresh resources to fulfill its promises.

The Budget is being keenly watched to see whether it includes any of the five Indira Guarantees promised by the UDF during the Assembly election campaign.

The government has already taken the first step by rolling out the initial phase of free bus travel for women.

The remaining promises include a 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 guarantees include interest-free loans of up to ₹5 lakh for young entrepreneurs and small businesses to promote self-employment.

Another key promise, announced by Congress leader Rahul Gandhi during the campaign, is to raise the social welfare pension to ₹3,000 a month.

Speaking ahead of the Budget on Wednesday, the CM said he faces the challenge of arranging an additional ₹20,500 crore to implement a plan worth around ₹35,000 crore set out in the Budget presented by the previous Left government in January this year.

Describing the task as "almost a miracle", he said the government would have to mobilise substantial resources if its planned development projects were to move forward.

The financial squeeze has been compounded by a significant shortfall in the revenue projected in the previous government's Budget, he said.

The white paper further highlights the state's precarious financial position, noting outstanding liabilities of more than ₹5 lakh crore and pending payments nearing ₹49,000 crore.

It says salaries, pensions and interest payments consume the bulk of government revenues, leaving limited room for fresh investment in infrastructure and development.

One of the key issues likely to feature in the Budget is the future of the Kerala Infrastructure Investment Fund Board (KIIFB).

The white paper argues that the institution requires major restructuring, pointing to loan liabilities of around ₹21,000 crore and another ₹35,000 crore worth of projects awaiting funding.

The opposition CPI(M), however, has challenged the government's assessment.

Former Finance Minister K N Balagopal has argued that Kerala's finances remain fundamentally strong and that there is no need to curtail welfare or development schemes.

He maintains that tax collections are improving and has urged the government to press the Centre for the release of the revenue deficit grant rather than scale back public spending.

With the UDF government promising a development vision different from that of the previous LDF dispensation while grappling with severe fiscal pressures, Friday's Budget will be closely watched to see how it balances financial discipline with welfare commitments and growth ambitions.

Published on June 18, 2026