Thiruvananthapuram: The 7th State Finance Commission has proposed “suitable changes” to the existing framework for sharing financial resources among local self-government institutions, taking into account the evolving economic conditions.
Headed by economist K.N. Harilal, the Commission submitted its first report for the 2026-27 fiscal to Kerala Governor Rajendra Vishwananth Arlekar.
According to the Commission, the recommendations aim to reinforce the current model of devolution by relying on more realistic and objective criteria, while ensuring greater financial strength for rural and urban local bodies.
As part of its preparatory work, the panel had sought public feedback in June 2025 on issues related to governance and finances of local bodies, including the scope for capital market borrowings, widening revenue sources, and improving disaster mitigation at the grassroots level.
The Commission said its recommendations for the remaining period of its tenure, from 2027-28 to 2030-31, would be submitted after the 16th Union Finance Commission finalises its award, as that is expected to significantly influence the State’s fiscal position.
The Governor is set to forward the report to the State government for further consideration and action.
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