Kerala has done its part. The Union government has not.
For two decades, Kerala has waited — land identified, groundwork laid — for a promise the Union government has yet to keep. On Wednesday, the Kerala Assembly spoke with one voice, passing a unanimous resolution that frames the absence of AIIMS not as an oversight but as part of a broader pattern: a state that governs well, finding itself systematically underfunded by the Centre it serves. The resolution is less a petition than a reckoning — a demand that the federation honor its obligations to one of its most capable members.
- Kerala has spent twenty years preparing for an AIIMS it was promised but never received, while the Union Budget offered sea turtle conservation in place of serious investment.
- A sweeping cut to MGNREGS — from ₹88,000 crore to ₹30,000 crore nationally — now forces states to absorb 40% of costs, saddling Kerala alone with an estimated ₹3,800 crore in new burden.
- The Vizhinjam Port dispute lays bare an unequal playing field: Kerala received viability funding as a repayable loan while other states received identical support as outright grants.
- The discontinuation of Revenue Deficit Grants threatens to erase ₹53,000 crore in support Kerala relied upon, while ₹965 crore in withheld IGST dues compounds the fiscal wound.
- Lawmakers across party lines voted unanimously — a rare unity signaling that the grievance transcends politics and has become a question of constitutional fairness between state and Centre.
Inside the Kerala Assembly on Wednesday, Chief Minister Pinarayi Vijayan moved a resolution that passed without a single dissenting voice: the Union government must finally establish an AIIMS in Kerala. The demand is not new — the state has pursued it for over twenty years, identified land, and completed most of the acquisition process. Yet the Centre has offered no concrete action, and the most recent Union Budget brought Kerala little more than a rare earth corridor and a sea turtle conservation project, with no mention of the high-speed rail corridor the state has long sought.
The resolution's reach, however, extended well beyond the medical institute. Lawmakers described what they called a pattern of financial discrimination. The rural employment guarantee scheme, once fully centrally funded, now requires states to bear 40 percent of costs — a shift that costs Kerala approximately ₹3,800 crore, even as the scheme's national budget was cut by ₹58,000 crore. The Vizhinjam Port dispute added another dimension: Kerala was asked to repay viability gap funding that other states received as grants, a distinction that transforms development support into debt.
The fiscal picture darkens further with the 16th Finance Commission's discontinuation of Revenue Deficit Grants — a mechanism through which Kerala received ₹53,000 crore during the previous commission's tenure. The Centre is also withholding ₹965 crore in IGST dues and has declined to compensate the state for revenue losses from GST rate reductions.
What the assembly produced was not merely a catalogue of grievances but a collective assertion: Kerala, a state with a demonstrated record of effective governance, is being systematically shortchanged. The unanimous vote made clear that whatever separates Kerala's political parties, they are united in the belief that the relationship between the state and the Union is in urgent need of correction.
Inside the Kerala Assembly on Wednesday, lawmakers from across the political spectrum rose to voice a single, unified complaint: the Union government has spent two decades ignoring Kerala's request for an All India Institute of Medical Sciences. Chief Minister Pinarayi Vijayan moved a resolution that passed without dissent, demanding the Centre finally act on what the state has made abundantly clear it needs and is ready to receive.
The frustration runs deep because Kerala has done its part. The state identified suitable land for the facility and completed most of the acquisition process. Yet despite this groundwork, despite the state's demonstrated capacity to implement major projects, the Union government has taken no concrete steps toward establishing AIIMS in Kerala—not in policy announcements, not in budget allocations, not in the recent Union Budget that offered Kerala little beyond a rare earth minerals corridor and a sea turtle conservation project. The high-speed rail corridor the state has long sought was absent entirely.
But the resolution's scope extended far beyond the medical institute. Lawmakers trained their criticism on what they characterized as a pattern of financial discrimination. The Mahatma Gandhi National Rural Employment Guarantee Scheme, recently renamed VB-G RAM-G, once received 100 percent central funding. Under the revised framework, states must now shoulder 40 percent of implementation costs. For Kerala, this shift alone translates to approximately ₹3,800 crore in additional burden. The national budget for the scheme itself was slashed from ₹88,000 crore to ₹30,000 crore—a ₹58,000-crore reduction that will reverberate through a program Kerala has implemented effectively for years.
The assembly also highlighted what it saw as unequal treatment in how the Centre handles major infrastructure projects. When Kerala requested that Viability Gap Funding for the Vizhinjam Port project be provided as a grant, the Union government instead sanctioned it as a repayable amount. Other states, the resolution noted, received such funding as grants. The distinction matters enormously: one is a gift, the other a debt.
The fiscal pressure intensifies further with the 16th Finance Commission's decision to discontinue Revenue Deficit Grants. During the 15th Finance Commission's tenure, Kerala received ₹53,000 crore through this mechanism. That support is now ending. Simultaneously, the Centre is withholding ₹965.16 crore in IGST dues owed to the state and has declined to compensate Kerala for revenue losses caused by GST rate reductions. Taken together, these moves paint a picture lawmakers described as fundamentally unfair.
The resolution's language was direct: these demands are essential not just for Kerala's development but for India's. The Union's approach toward the state must change urgently. What emerged from the assembly floor was not merely a list of grievances but a statement that Kerala—a state with a track record of effective governance and implementation—is being systematically shortchanged by the Centre. The unanimous vote suggested that whatever divides Kerala's political parties, they agree on this much: the relationship between the state and the Union requires correction.
Notable Quotes
The House unanimously demands that AIIMS be urgently sanctioned for Kerala— Kerala Assembly resolution moved by Chief Minister Pinarayi Vijayan
The demands raised by Kerala are essential for the development of both Kerala and India as a whole. The Union's approach towards the state must be urgently corrected.— Kerala Assembly resolution
The Hearth Conversation Another angle on the story
Why has Kerala been asking for AIIMS for twenty years without getting it?
That's the question the assembly is essentially asking too. Kerala has the land, has done the acquisition work, has shown it can manage complex projects. The barrier isn't readiness on the state's side—it's political will or priority at the Centre.
The budget cuts to MGNREGS seem like a separate issue. Why bundle them together?
They're not separate in Kerala's view. They're part of a pattern. The state sees the AIIMS denial, the MGNREGS cuts, the Vizhinjam Port funding treated differently than other states—it all points to the same thing: the Centre treating Kerala differently, less favorably.
What does it mean that the Centre is withholding ₹965 crore in IGST dues?
It means Kerala is owed money and isn't getting it. That's not a policy disagreement—that's money the state is entitled to under the tax-sharing arrangement. When you add that to the other cuts and denials, it starts to look deliberate.
Could the Centre argue these are just fiscal constraints?
Possibly. But the resolution points out that other states get Viability Gap Funding as grants while Kerala gets it as a loan. That's hard to explain as mere constraint. It looks like choice.
What happens now? Does the resolution change anything?
Formally, no. A state assembly resolution doesn't bind the Union government. But it's a public statement of grievance, signed by every party in the legislature. It's a way of saying: we're united on this, and we're not going away quietly.
Is this about politics or genuine fiscal federalism?
Probably both. But the assembly's point is that genuine federalism means treating states fairly, not withholding dues or shifting costs unilaterally. Whether the Centre agrees is another question.