Kerala CM Satheesan's maiden budget flaunts futuristic proposals, flags state's bad finance

Kerala Chief Minister V D Satheesan's concept of new-age Kerala, unveiled in his revised state budget for 2026-27, is futuristic. He dabbles in terms like space economy, AI innovative models, carbon sequestration in his budget speech. He has a problem, though; the state's finances are choked, and he wants people to know that.

From the outset, Satheesan juggled roles of a fault-finder and an ultimate optimist. More than once did he remind everyone that there was a serious miscalculation in the revenue deficit grant on the part of the previous LDF government, which left the state with a shortfall of ₹20,500 crore. What Satheesan tried to convey was that he could wave his magic wand to shower goodies, but his hands are crippled by the state's woeful finances.

It wasn't just the miscalculation of grants that peeved Satheesan. He was not pleased with almost all the pet schemes of the LDF government. Satheesan was harsh on LDF's trusted development booster - KIIFB.

"It relies on off-budget borrowings at interest rates significantly higher than those incurred on standard sovereign state borrowings. This has inexorably pushed the state's borrowings and debt burden beyond permissible limits, triggering grave macroeconomic imbalances," Satheesan said.

He sounded like a man bent on fixing flaws of his predecessors. "We will constitute an expert committee to initiate comprehensive structural reforms and overhaul of KIIFB's current operational framework," he said.

Satheesan also had issues with the Assured Pension Scheme. "There is ambiguity in the APS announced by the previous Government. Therefore, after reviewing it, the existing NPS scheme shall be revamped," he said.

The LDF government had given in principle sanction for the APS, and as per the order, the maximum assured pension will be 50 per cent of the basic pay at the time of retirement.

Even when saddled with debts, Satheesan's optimism hasn't waned. The budget envisages a comprehensive 'Kerala Maritime Policy' to catalyse the development of the state's four primary non-major ports: Vizhinjam-Kovalam, Kollam, Beypore, and Azhikkal. His budget promises big on 'Space Economy' and notes that the burgeoning ecosystem of private startups in the space sector is unlocking massive employment opportunities for young

engineers. The budget proposes specialised research institutions emphasising satellite technology alongside robust measures to attract more students to this cutting-edge field.

Satheesan's vision is long-term, and for immediate gains, he has announced a slew of measures - the ‘Flood Cess Arrears Settlement Scheme, 2026’ and introduction of tax slabs for low-alcoholic beverages. A sales tax rate of 120 per cent will be fixed for such products having a strength of alcohol from 0.5 per cent v/v (volume by volume) up to 10 per cent v/v, and a sales tax rate of 175 per cent has been decided for products having alcohol strength above 10 per cent v/v and up to 20 per cent v/v. He has also set a timeline for settling dues for undervaluation of properties through adalats - October 2026.