State Finance Commission chairman K.N. Harilal handing over the first report of the Commission to Governor Rajendra Vishwanath Arlekar.
| Photo Credit: Special arrangement
The 7th State Finance Commission indicated on Monday that it had sought to bring in “suitable changes” in the sharing of financial resources among local self-government institutions in the State in line with changing economic trends.
The Commission headed by K.N. Harilal handed over its first report for the 2026-27 fiscal to Governor Rajendra Vishwananth Arlekar on Monday. The Commission said it had made recommendations to strengthen the existing model where resources are shared purely on the basis of realistic criteria.
In June 2025, as part of drafting its recommendations, the Commission had sought the public’s feedback on topics related to the governance and finances of local bodies, including the possibilities in capital market borrowings in funding development projects, expanding their revenue base and efficient disaster mitigation at the local level.
The Commission said it would submit its recommendations for the remainder of its term (2027-28 to 2030-31) after the recommendations of the 16th Union Finance Commission, which deals with the sharing of financial resources among the States, were known.
“The recommendations of the Union Finance Commission are likely to usher in major changes in the financial situation of the State. The State Finance Commission will submit its further recommendations after taking them into consideration,” the Commission said.
State Finance Commissions are constituted by the State government under clause 1 of Article 243 (I) and (Y) of the Constitution alongside relevant Sections of the Kerala Panchayat Raj Act and the Kerala Municipalities Act to review the financial position of rural and urban local bodies and make recommendations to the Governor.
The Cabinet had constituted the 7th State Finance Commission with Prof. Harilal as Chairperson in September 2024.
Before drafting its recommendations the State Commission had held sittings with District Planning Committees, Corporations and selected local governments. It also consulted leaders of political parties, associations representing people’s representatives and subject experts.
The Commission had also undertaken studies on resource mobilisation, decentralised planning and the deployment of financial resources.
Additional Chief Secretary (Finance) K.R. Jyothilal, State Finance Commission secretary P. Anil Prasad and Advisor Hari Kurup K.K were also present.
The Governor will transfer the report to the State government for further action.
Published – December 29, 2025 05:41 pm IST
