The Kerala Budget for 2010-11, presented to the Assembly by Finance Minister T. M. Thomas Isaac, estimates a cumulative deficit of 577.09 crore.

As per the revised estates, the current year will end with a deficit of Rs. 169.51 crore. The revenue deficit had gone up by Budget estimates for the current year by 35 per cent. In the coming year, the Minister is hoping to bring it down from 1.9 per cent to 1.48 per cent. According to him, a surplus Budget would have been possible if the State had received favourable treatment from the 13th Finance Commission. The State’s share in Central taxes drops from 2.6 per cent to 2.3 per cent as per the recommendations.

Dr. Isaac has announced additional expenditure of Rs. 874.60 crore for the coming year and an additional resources mobilization of an almost equal amount (Rs. 874.14 crore). He hopes that tax revenues would go up by 25 per cent in 2010-11.

“The 13th Finance Commission has proposed that the State needs to get rid of revenue deficit by 2014-15 and efforts to achieve this are to be started in 2011-12. But, we have decided to bring down the revenue deficit to the level of the budget estimates of 2009-10, prior to the recession. The revenue deficit for 2010-11 is Rs.3629.55 crore, ie., 1.48% of GSDP. Even though the gross expenditure rose by 13%, we were able to reduce the revenue deficit since we fixed the revenue receipts 15% higher than that of 2009-10. The contribution of Central assistance towards this is meagre. The central assistance over the Revised Estimates of 2009-10 is Rs.640 crore ie., an increase of 8.7% only. That is, Rs.484 crore less than the Budget Estimates for 2009-10, an impact of the award of the 13th Finance Commission. I am fully confident to achieve the targeted increase in the revenue receipts,” he said.

“The borrowing ceiling fixed by the Government of India for 2010-11 is 3.5%. We intend to utilize it completely. As a result, the fiscal deficit will be 3.49%. But, due to the decline in revenue deficit, a major share of borrowings can be set apart for capital expenditure. The total capital expenditure for 2010-11 will be Rs.4145.38 crore. This is an all time record. The capital expenditure has increased by over 2% more than the growth of State revenue. If we can sustain this, we will be able to achieve splendid gains in the State's economic growth.”