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Kerala Minister of Finance KN Balagopal expressed disappointment over the neglect of Kerala in Budget 2026. He stated that the budget did not include any announcements that addressed the needs of Kerala, adding that not a single one of the state’s expectations were met.
Speaking to the media on February 1 after the Union Minister Nirmala Sitharaman presented the budget in parliament, Balagopal said that the overall budget is disappointing, even if one were to ignore the fact that Kerala received no special promises.
“It is disappointing that the budget did not mention any additional measures that would help move our economy forward,” he said.
Kerala was specifically highlighted in two projects proposed under Budget 2026: one involving a rare earth corridor and another related to the tourism sector.
During the Budget speech held on February 1 morning, Union Finance Minister Nirmala Sitharaman announced that mineral-rich states, including Odisha, Kerala, Andhra Pradesh, and Tamil Nadu, will get dedicated rare earth corridors to promote mining, processing, research, and manufacturing of rare earth minerals. The Union Cabinet had, on November 26, 2025, approved a scheme to promote the manufacture of Sintered Rare Earth Permanent Magnet (REPM).
As for tourism, she announced turtle trails along key nesting sites located in the coastal areas of Odisha, Karnataka, and Kerala.
The budget proved especially disappointing for Kerala as the state was expecting significant announcements, given that 2026 is an election year. One of the expected announcements was an All India Institute of Medical Sciences (AIIMS) for the state, a promise often repeated by Kerala’s first BJP MP, Supresh Gopi. Additionally, the state had been looking forward to the high-speed rail project, another consistent demand. Although FM Nirmala Sitharaman announced seven high-speed rail corridors in Budget 2026, no Kerala city figured in the list. The corridors announced are along the following routes: Mumbai-Pune, Pune-Hyderabad, Hyderabad-Bengaluru, Hyderabad-Chennai, Chennai-Bengaluru, Delhi-Varanasi, and Varanasi-Siliguri.
‘Turtle egg for Kerala’
Reacting to the budget, Kerala Minister for Fisheries, Culture, and Youth Affairs, retorted, “All that Kerala got from the Union Budget is a turtle egg.”
Congress MP Shafi Parambil said the budget completely ignored Kerala’s potential sectors. “It feels as though the government does not even recognise that Kerala exists on the map of India. When seven railway projects were announced, Kerala’s name was not mentioned in any of them. That itself shows that the Union wants Kerala’s development to move at a ‘turtle's’ pace.”
CPI(M) MP John Britas also expressed disappointment over Kerala not being included in the high-speed rail corridors. He said, “Kerala is a state that has been advocating for a high-speed rail corridor for many years. When Kerala moved forward with a project [K-Rail], it was the Union government that created obstacles to it. In the meantime, [metroman E] Sreedharan appeared and made claims that the Union had given approval for high-speed rail. However, the budget did not even make a single mention or reference to these matters.”
Neglecting south
Budget 2026 saw no major announcements for all south Indian states, leading to a repeat of previous year allegations from the south of being ignored and sidelined by the BJP-led Union government. This is despite the fact that two major states – Kerala and Tamil Nadu – along with the union territory of Puducherry, will go to polls in a matter of months.
Besides the rare earth corridors, FM Nirmala Sitharaman’s proposals for south India only included a handful of tourism trails. Besides the turtle trails along coastal Karnataka and Kerala, she has announced birdwatching trails along the Pulikat lake in Andhra Pradesh and Tamil Nadu. She also announced mountain trails in Araku Valley in Andhra Pradesh and Podhigai Malai (Agasthiar Malai) along the Kerala-Tamil Nadu border, in addition to trails in Himachal Pradesh, Uttarakhand, and Jammu and Kashmir.
Moreover, Finance Minister Nirmala Sitharaman announced in the Budget speech that the Union government has accepted the 16th Finance Commission’s recommendations to retain the vertical share of devolution at 41%. Tax devolution is a contested topic in southern India, with states like Karnataka, Kerala, and Tamil Nadu arguing that they have been subjected to unfair revenue sharing. The BJP-led Union government is resorting to punishing states that perform well economically, leaders of these states have constantly alleged.