Finance Minister K.N. Balagopal on Saturday reiterated that Kerala is hoping for a better deal from the 16th Finance Commission, having had its share of the divisible tax pool cut to 1.92% under the previous commission.
Speaking at a pre-State Budget consultation with the media here, Mr. Balagopal said if Kerala’s share from the divisible pool was further reduced, it could spell trouble for the State. The State’s share of the divisible pool was down to 1.92% under the 15th commission from 3.88% under the 10th commission. “Last time, Kerala had the lowest share. We are hoping that will change,” he said.
The 16th commission headed by Arvind Panagariya had submitted its report, meant for the period from 2026-27 to 2030-31, to President Droupadi Murmu in November 2025. The recommendations are expected to be made public soon.
Earlier, Kerala and States such as Assam, Jharkhand and Odisha had comparable percentage as a share of the tax pool, but Kerala’s was drastically cut. The State government has brought these issues to the attention of the commission, Mr. Balagopal, who is scheduled to present his sixth Budget on January 29, said.
Extra borrowing limit
During the commission’s visit to Kerala in December 2024, Kerala had urged it to raise the share of States in the divisible tax pool from the present 41% to 50% and rework the formula used for resource sharing among States. Kerala also wanted the commission to recommend measures for reducing the imbalances in resource sharing among States. In September 2025, the Kerala government submitted a supplementary memorandum wherein it sought supplementary grants and eligibility for a “temporary extra borrowing limit” of 0.5% of the Gross State Domestic product (GSDP) to help it absorb the losses arising from the Goods and Services Tax (GST) slab rejig and the US reciprocal tariffs.
On Saturday, Mr. Balagopal also pointed out that Kerala was not averse to public private partnerships (PPP). He cited the Cochin International Airport Ltd (CIAL) as an example of Kerala’s positive approach to the concept.
