Published Feb 06, 2026 | 3:15 PM ⚊ Updated Feb 06, 2026 | 3:15 PM
Unfair allocation for Kerala in Union Budget. Representative Image.
Synopsis: Even though ranked higher than other Indian states in almost all human development indices, the BJP-led Union government has been ignoring Kerala when it comes to budgetary allocations. This marginality is not incidental; it is structural and electoral. Kerala’s electorate has repeatedly resisted the BJP’s political project in both Assembly and Lok Sabha elections.
Kerala occupies a paradoxical place in India’s political and economic imagination. It consistently ranks at the top of human development indices, combines high literacy with strong public health outcomes, and sustains a vast global diaspora whose remittances form a critical pillar of India’s foreign exchange earnings.
Its tourism economy, rubber and spice production, and export-oriented human capital are not merely regional assets but national ones. And yet, within the strategic calculus of national politics, Kerala remains curiously peripheral — almost invisible — to the BJP, which has been at the Centre since 2014.
This marginality is not incidental; it is structural and electoral. Kerala’s electorate has repeatedly resisted the BJP’s political project in both Assembly and Lok Sabha elections. Except for Suresh Gopi’s breakthrough in Thrissur, the party has failed to establish durable electoral footholds in a state long dominated by the CPI(M)-led LDF and the Congress-led UDF.
In a political system where policy attention is often guided by vote yield and electoral volatility, Kerala does not present itself as a rewarding arena. Larger states with swing constituencies and higher seat returns command disproportionate strategic focus. Kerala, by contrast, offers limited electoral dividends.
The consequence of this political arithmetic has been a perceptible thinning of the Union government’s strategic engagement with Kerala’s developmental priorities. Over time, this has translated into a pattern of delayed approvals, truncated allocations and symbolic gestures in place of transformative investment.
The 2026 Union Budget crystallised this dynamic with unusual clarity. Despite Kerala’s contributions to skilled labour mobility, remittance flows, tourism revenues, and social capital, the budget bypassed several long-standing demands that carried both economic and symbolic weight.
Instead, Kerala found mention in softer, less consequential initiatives such as eco-tourism “turtle trails”— a phrase that quickly became shorthand for the state’s peripheral position in national development priorities.
Few issues expose the gap between political assurance and policy delivery as starkly as the prolonged uncertainty over an All India Institute of Medical Sciences (AIIMS) for Kerala. Over the years, leaders across party lines have publicly asserted that the state would receive an AIIMS, framing it as long-overdue recognition of Kerala’s healthcare legacy and its role in supplying medical professionals domestically and abroad.
Union Minister of State Suresh Gopi, in particular, made repeated and emphatic public claims that an AIIMS would come to Kerala, amplifying public expectations.
Yet the Union Budget 2026–27 once again excluded Kerala from the list of states sanctioned for new AIIMS institutions, despite the state completing key preparatory steps, including earmarking land in Kinalur, Kozhikode.
This dissonance between political messaging and fiscal decisions has deepened public scepticism, reinforcing the perception that commitments to electorally marginal states are easier to announce than to honour — an illustration of how tactical signalling, absent institutionalised intergovernmental agreements, translates into low accountability.
A similar pattern is visible in transport infrastructure, central to Kerala’s long-term growth strategy, given its linear geography, dense settlement, and limited expressway penetration.
Despite repeated demands for inclusion in national high-speed or semi-high-speed rail plans to improve mobility and regional integration, the seven corridors announced by the Union government once again bypassed Kerala, even as neighbouring Tamil Nadu secured multiple commitments.
While the Union government has cited increased railway allocations, about ₹3,795 crore in the latest budget, much of this funding is directed towards station redevelopment rather than capacity-enhancing measures such as new lines, track doubling, or speed upgrades, improving optics without addressing structural bottlenecks.
Against this backdrop, the Kerala government has revived plans for a Regional Rapid Transit System connecting Thiruvananthapuram to Kasaragod, granting in-principle approval and initiating consultations with the Centre to secure mandatory clearances and funding.
Meanwhile, veteran engineer E Sreedharan, a key figure behind earlier high-speed rail proposals, has opened a private office in Malappuram to begin work on a detailed project report for a separate high-speed corridor, despite there being no formal government approval for his plan.
The dual developments highlight both renewed intent at the state level and the complex interplay between independent technical advocacy and the formal process of securing central clearances and financing within India’s federal framework.
The Vizhinjam International Seaport stands as the most consequential infrastructure project in Kerala’s contemporary history and a telling case study in Centre–state asymmetry. As India’s first deep-water transhipment port, Vizhinjam holds the potential to reposition Kerala within global maritime trade, reduce India’s dependence on foreign transhipment hubs, and catalyse industrial growth along the southern coastline.
Strategically, its value extends beyond Kerala, intersecting with national shipping, logistics, and geopolitical interests in the Indian Ocean.
Yet the port’s financing structure reveals a more ambivalent central commitment. While Kerala has borne the bulk of the project cost, the Union government’s Viability Gap Funding of ₹817.8 crore is tied to repayment conditions that effectively convert a grant into a deferred liability.
State authorities have argued that this arrangement subverts the very logic of VGF, which is meant to de-risk strategically important but financially challenging projects. Over the long term, the repayment clause could impose an additional burden running into tens of thousands of crores, diluting the fiscal benefits of the port for the state.
This uneasy arrangement has come to symbolise Kerala’s constrained bargaining position within the federal framework. Even as Vizhinjam nears operationalisation, disputes over revenue sharing, repayment terms, and political ownership persist.
The irony is striking: A project of national strategic importance proceeds with limited national financial generosity, leaving the state to shoulder risk while the Centre retains symbolic credit.
Kerala’s coastal vulnerability further complicates this picture. The state has repeatedly sought comprehensive disaster mitigation and coastal protection packages in the wake of devastating floods, landslides, and accelerating shoreline erosion.
Despite being among the worst-affected states in terms of climate-induced disasters over the past decade, Kerala’s demands for long-term resilience funding have met with fragmented responses rather than a coherent national framework. In a warming climate, this neglect carries consequences not just for Kerala, but for India’s broader disaster-preparedness architecture.
Taken together, these developments point to a moment of pronounced federal strain. The 2026 Union Budget’s silence on Kerala’s major demands, contrasted with its tokenistic references to initiatives like “turtle trails,” reinforced the sense of a state relegated to the margins of national imagination.
More fundamentally, it exposed the fragility of cooperative federalism when political alignment and electoral utility become implicit criteria for development attention.
Chief Minister Pinarayi Vijayan and the LDF have framed this pattern as discriminatory, arguing that federal resource allocation should be insulated from partisan considerations. Vijayan has repeatedly warned against the erosion of constitutional federalism and the dangers of central overreach.
Yet this stance is not without its own limitations. Persistent invocation of bias, without a parallel strategy for building leverage through multi-state coalitions, institutional negotiation, or cross-party engagement at the Union government, risks entrenching a politics of grievance rather than yielding tangible outcomes.
Complicating matters further is the shadow cast by central investigative agencies. Ongoing probes and allegations involving individuals close to the chief minister have inevitably constrained his political bandwidth, weakening Kerala’s ability to mount an uncompromising challenge to the Union government.
Even where investigations follow legal process, their political timing and cumulative pressure have the effect of narrowing the state leadership’s will-power, negotiating space, and reinforcing asymmetries in Centre–State power.
Kerala’s development story is defined by a tension between strong internal capabilities and limited external leverage. Its educated workforce, global diaspora, agricultural exports, maritime potential, and cultural capital provide a formidable foundation for growth.
Yet the gap between this objective strength and its political weight in national decision-making has produced a pattern of deferred commitments and diluted partnerships.
The BJP’s limited electoral prospects in Kerala undeniably shape the Centre’s strategic priorities. But this reality also places an onus on Kerala’s political leadership, across ideological lines, to rethink its approach to federal engagement. Moving beyond rhetorical confrontation towards vocal institutional negotiation and strategic alignment with national priorities is no longer optional.
Kerala does not seek charity; it seeks recognition proportionate to its contribution. The path forward lies in asserting that sustainable development in a federal democracy cannot be contingent on electoral arithmetic alone.
It must rest on institutional respect, cooperative federalism, and a shared vision of national progress that includes even those states that refuse to conform politically.
(Views are personal. Amal Chandra is an author, policy analyst and columnist. He tweets @ens_socialis. Edited by Muhammed Fazil.)
