KOCHI: Is it mathematical jugglery or a genuine assurance that the state economy is on a sustained growth path, with the capacity of supporting higher receipts from both tax and non-tax sources?
Critics argue that Finance Minister K N Balagopal, in his election-year budget, has opted for over-ambition, making optimistic and potentially unviable projections. They point out that the estimates for taxes, duties and grants, appear overly ambitious — particularly when juxtaposed with the revised estimates for the current fiscal.
M K Sukumaran Nair, former director of the Centre for Budget Studies at Cusat, said that while the budget announces several welfare measures, especially for deprived sections, doubts remain over whether the projected growth in revenue receipts and grants can be realised.
“I am doubtful whether the pay commission recommendations can be implemented, as the state does not have the fiscal capacity. Similarly, the assured pension scheme could prove detrimental to the economy,” he told TNIE.
According to him, committed expenditure and devolution to local bodies — which is also a statutory obligation — consume the lion’s share of revenue receipts, leaving very little room for capital expenditure. “The assumptions behind the budget math are flawed,” he added.
Resmi P Bhaskaran, policy analyst, said the fiscal brief raises serious questions about both revenue and expenditure planning. “While the growth projected in the state’s own revenue broadly aligns with expected economic growth, the sharp jump in the share of central taxes, duties, and grants-in-aid appears unrealistic,” she noted.
She questioned whether the government is expecting a significant shift in the Centre’s attitude towards Kerala in the forthcoming Finance Commission. “What assurance has the state received to project such a steep hike in this component of revenue in 2026-27? Otherwise, a major mismatch in figures could emerge, leaving a vacuum on the expenditure side and turning these projections into castles in the air,” Resmi said.
On the expenditure front, she warned of a potential hike of around Rs 25,000 crore in salaries and pensions. “Even though the government highlights increased old-age pensions and direct benefit transfers to nearly seven million people, a stark disparity persists in the welfare approach of the Left government,” she said.
Dr N Ajith Kumar, director of the Centre for Socio-economic and Environmental Studies (CSES), said the budget arithmetic is workable and rooted in anticipated growth dividends from infrastructure projects. “Infrastructure investments will yield dividends in the coming years, and growth prospects remain high,” he said, pointing out that the projections for CGST and SGST look realistic.
However, Ajith was cautious about the huge jump in grants from the Finance Commission, from Rs 2,883.39 crore (RE) in 2025-26 to Rs 17,659.79 crore in 2026-27 (BE).