Finance Minister KN Balagopal on Saturday reiterated that Kerala is hoping for a better deal from the 16th Finance Commission as its share of divisible tax pool was reduced to 1.92% under the previous commission.
Addressing the media before the state budget was released here, Mr. Balagopal said that if Kerala’s share from the divisible pool was reduced further, it could spell trouble for the state. The share of the state in the divisible pool has come down to 1.92% in the 15th Commission from 3.88% in the 10th Commission. “Kerala had the lowest share last time. We hope that will change,” he said.
The 16th commission, headed by Arvind Panagariya, submitted its report, covering the period 2026-27 to 2030-31, to President Droupadi Murma in November 2025. The recommendations are expected to be made public soon.
Earlier, Kerala and states like Assam, Jharkhand and Odisha had a comparable percentage as a share of the tax fund, but Kerala has been drastically reduced. Mr. Balagopal, who is scheduled to present his sixth budget on January 29, brought these issues to the notice of the commission by the state government.
Extra borrowing limit
During the commission’s visit to Kerala in December 2024, Kerala urged it to increase the states’ share of the divisible tax pool from the current 41% to 50% and overhaul the formula used to share resources among states. Kerala also wanted the commission to recommend measures to reduce the imbalance in resource sharing between states. In September 2025, the Kerala government submitted a supplementary memorandum seeking additional grants and eligibility for a “temporary extra borrowing limit” of 0.5% of gross state domestic product (GSDP) to help absorb losses from the Goods and Services Tax (GST) and US reciprocal tariffs.
On Saturday, Mr. Balagopal also pointed out that Kerala is not averse to Public Private Partnership (PPP). He cited Cochin International Airport Ltd (CIAL) as an example of Kerala’s positive approach to the concept.
Published – 24 Jan 2026 20:30 IST
