Amid UDF-LDF spat over Kerala finances, govt reminds departments of need for ‘austerity’ in Budget estimates

“The financial constraints being faced by the State government make it imperative for the government to prepare the Budget 2027-28 with austerity,” the Finance Department has said in a communication to sister departments while issuing the deadlines for submitting the estimates. | Photo Credit: REUTERS Amid the spat between the ruling Congress-led UDF government and the Opposition CPI(M)-led LDF over Kerala’s financial health, the State Finance Department has repeated its annual reminder to government departments to keep in mind the need for “austerity” when preparing the estimates for the next State Budget for the 2027-28 fiscal.“The financial constraints being faced by the State government make it imperative for the government to prepare the Budget 2027-28 with austerity,” the Finance Department has said in a communication to sister departments while issuing the deadlines for submitting the estimates.The Finance department has also repeated the advice about dropping uneconomical schemes and “perhaps deferment of certain measures, including maintenance expenditure, which can be postponed.”Ever since the UDF government took over in May this year, it and the LDF have been at loggerheads over the State finances, with both having issued White Papers. While the UDF White paper, presented in the State Assembly in June, had claimed that Kerala’s fiscal structure was under serious and growing strain, the CPI(M)’s ‘White Paper of Facts’ sought to counter it, saying the State registered strong growth under the 10-year LDF rule.Presenting the Revised Budget for 2026-27 on June 19 after the UDF took over, Chief Minister V.D. Satheesan, who handles the Finance portfolio, had slashed the annual Plan outlay from ₹35,750 crore to ₹30,370 crore, citing “a miscalculation” of anticipated revenue receipts by the previous LDF government.Revenue mobilisation measuresNow, the Finance Department has also urged departments to accelerate revenue collection and list out steps taken to recover arrears. Kerala’s revenue arrears stood at ₹41,188.44 crore, as on March 31, 2025, according to a report of the Comptroller and Auditor General (CAG) for 2024-25 tabled in the State Assembly on June 23 this year.Further, government departments have been directed to furnish estimates of Foreign Exchange Commitments and outgoes (payments) for the formulation of the Foreign Exchange Budget by the Centre, in addition to a list of all externally-aided projects and centrally-sponsored schemes.Estimates for the non-Plan expenditure have to be submitted by September 10, Plan expenditure by September 15 and revenue and other receipts by September 20. Published - July 27, 2026 11:28 am IST