Kerala’s 2026–27 Budget, the last of the second Pinarayi Vijayan government, leans heavily on welfare, pensions and public investment even as Finance Minister K.N. Balagopal acknowledged a tight fiscal position and sharp criticism of the Centre.
The Budget projects revenue receipts of about Rs 1.83 lakh crore against an expenditure of around Rs 2.18 lakh crore. The effective capital outlay is pegged at Rs 30,961.48 crore, with a revenue deficit of Rs 34,587 crore (2.12 per cent of GSDP) and a fiscal deficit of Rs 55,420 crore (3.4 per cent of GSDP).
Revenue Receipts: Rs 1,82,972.10 crore
Revenue Expenditure: Rs 2,17,558.76 crore
Revenue Deficit: Rs 34,586.66 crore
Public Debt (Net): Rs 51,378.49 crore
Public Account (Net): Rs 4,000 crore
On the income side, the state is targeting an increase of Rs 45,889.49 crore in revenue, including a Rs 10,271.51‑crore rise in the state’s own tax revenue and Rs 1,595.05 crore more in non‑tax revenue.
To cushion households and staff, the Budget raises monthly wages by Rs 1,000 for anganwadi workers, ASHA workers and pre‑primary teachers; Rs 500 for anganwadi helpers; and hikes school mid‑day meal cooks’ daily wage by Rs 25.
Honorariums go up by Rs 1,000 for literacy activists, and library allowances rise by Rs 1,000 a month, while pensions for journalists and patients with cancer, leprosy, AIDS and TB increase by Rs 1,500 and Rs 1,000 per month, respectively.
Pay revision, DA dues and assured pension
Balagopal announced the 12th Pay Revision Commission, promising to receive its report within three months and implement it on time, reaffirming the Left government’s practice of revising pay every five years.
All pending DA and DR instalments for employees and pensioners will be released in full, with one instalment bundled with the February salary and the remaining dues with March pay, and arrears cleared in phases starting this Budget year.
The government will restore the house‑building advance scheme for staff.
In a major structural move, the existing contributory pension scheme will be replaced by an Assured Pension Scheme from 1 April, guaranteeing a maximum pension of 50 per cent of basic pay plus DA, with an option for current NPS members to switch.
Growth, local bodies and new corridors
The Budget sets aside Rs 14,500 crore for social security pensions and allocates Rs 3,720 crore for the Chief Minister’s Women’s Safety Scheme and Rs 400 crore for the Connect to Work Scholarship.
Local bodies will receive Rs 3,237 crore as General Purpose Fund, Rs 4,316 crore as Maintenance Fund and Rs 10,189 crore as Plan Fund, while honorariums for panchayat members and councillors will be increased and a welfare fund created for former representatives.[
A standout economic initiative is a rare‑earth corridor linking Vizhinjam port, Chavara and Kochi, to be anchored at Chavara, which the Budget says can attract Rs 42,000 crore in investment and create 50,000 jobs, backed by Rs 100 crore for a Critical Minerals Mission.
The state also proposes ₹100 crore for initial work on a Thiruvananthapuram–Kasaragod Regional Rapid Transit System, a Rs 5,217‑crore KIIFB project to upgrade the Thiruvananthapuram–Angamaly MC Road, and a Rs 50‑crore “defence corridor”, signalling a continued bet on infrastructure‑led growth.
Kerala Budget 2026 highlights
- Budget projects revenue receipts of ₹1.83 lakh crore and total expenditure of ₹2.18 lakh crore.
- Effective capital expenditure is ₹30,961.48 crore.
- Revenue deficit is ₹34,587 crore (2.12% of the state’s Gross State Domestic Product).
- Fiscal deficit is ₹55,420 crore (3.4% of GSDP).
- Revenue receipts are expected to grow by ₹45,889.49 crore.
- The state targets an increase of ₹10,271.51 crore in own tax revenue and ₹1,595.05 crore in non‑tax revenue.
- Monthly wages of anganwadi workers will be increased by ₹1,000.
- Monthly wages of anganwadi helpers will be increased by ₹500.
- Monthly wages of ASHA workers will be increased by ₹1,000.
- Monthly wages of pre‑primary teachers will be increased by ₹1,000.
- Daily wages of school mid‑day meal cooks will be increased by ₹25.
- Monthly wages of literacy animators will be increased by ₹1,000.
- Daily wages of contract and daily‑wage employees will be increased by 5%.
- Journalists’ pension will be increased by ₹1,500 per month.
- Monthly allowance of librarians will be increased by ₹1,000.
- Monthly pensions for patients suffering from cancer, leprosy, AIDS and tuberculosis will be increased by ₹1,000.
- The 12th Pay Revision Commission has been announced; its report will be received within three months and implemented in a time‑bound manner.
- All pending DA (Dearness Allowance) and DR (Dearness Relief) instalments of government employees and pensioners will be paid in full.
- One instalment of DA will be paid along with the February salary.
- The remaining DA and DR instalments will be paid along with the March salary.
- DA and DR arrears will be cleared in phases, with the first instalment paid in the Budget year.
- The house‑building advance scheme for government employees will be restored.
- From 1 April, the current participatory pension scheme will be replaced by an Assured Pension Scheme.
- Under the Assured Pension Scheme, a maximum pension equal to 50% of basic pay will be guaranteed.
- Dearness Relief will be admissible under the Assured Pension Scheme.
- Existing NPS (National Pension System) members will have the option to shift to the Assured Pension Scheme.
- ₹20 crore is allocated to set up a V.S. Centre in Thiruvananthapuram in memory of former Chief Minister V.S. Achuthanandan.
- ₹10 crore is provided for a feasibility study of the Kattappana–Theni tunnel road.
- ₹3 crore is allocated to establish a history research centre at Ponnani in the name of Islamic scholar and social reformer Sheikh Zainuddin Makhdoom II.
- ₹1.5 crore is allocated for the Ayyankali Study Centre.
- ₹1.5 crore is allocated for the Kavarikulam Kandan Kumaran Study Centre.
- ₹1.5 crore is allocated for the Mar Ivanios Museum.
- ₹3 crore is allocated to set up menopause clinics in district hospitals.
- ₹22.27 crore is allocated for a marketing and distribution network to promote and distribute Kudumbashree products.
- A “Life Saver” scheme will provide cashless treatment for the first five days to road accident victims.
- ₹30 crore is allocated under the KARE rare‑disease treatment scheme to provide medicines for spinal muscular atrophy.
- A KIIFB project of ₹5,217 crore is proposed for development of the Thiruvananthapuram–Angamaly MC Road.
- Bypasses will be built at Kilimanoor, Nilamel, Chadayamangalam, Ayur, Pandalam and Chengannur towns, and various junctions will be upgraded as part of the same project.
- ₹100 crore is allocated for initial works of the Thiruvananthapuram–Kasaragod Regional Rapid Transit System (RRTS) project.
- A Finance Tower will be established in Kochi to strengthen the state’s financial administration system.
- Infrastructure at former sales tax check‑posts will be upgraded to advanced monitoring systems under the GST regime.
- ₹2,071.95 crore is allocated for agriculture and allied sectors.
- ₹3,720 crore is allocated for the Chief Minister’s Women’s Safety Scheme.
- ₹400 crore is allocated for the Chief Minister’s Connect to Work Scholarship Scheme.
- ₹14,500 crore is allocated for the disbursal of welfare pensions.
- ₹5 crore is allocated to honour and reward taxpayers.
- ₹20 crore is allocated for a scheme to provide a nativity card to every citizen in Kerala.
- Local self‑government institutions will receive ₹3,237 crore as General Purpose Fund, ₹4,316 crore as Maintenance Fund and ₹10,189 crore as Plan Fund.
- Honorarium of panchayat members and councillors will be increased.
- A welfare fund will be created for former elected representatives of local self‑government institutions.
- A rare‑earth corridor connecting Vizhinjam port with Chavara and Kochi will be established with its hub at Chavara; it is expected to attract investments of ₹42,000 crore and create 50,000 jobs.
- ₹100 crore is allocated for a Critical Minerals Mission.
- ₹50 crore is allocated for a defence corridor.
- ₹30 crore is allocated, on a PPP model, to set up a “Cyber Valley” with artificial intelligence and other technologies in Kochi Infopark.
- ₹10 crore is allocated for a global school for employment training and skill acquisition.
- ₹150 crore is allocated to expand the “Work Near Home” initiative.
- ₹60 crore is allocated for a Special Enrichment Scheme to provide quality education in tribal areas.
- ₹20 crore is allocated to set up a modern “Gig Hub” for gig workers.
- A one‑time scrappage bonus of ₹40,000 will be given to those who scrap old petrol and diesel autorickshaws and purchase electric autos.
- Loans for purchasing electric autorickshaws will carry a 2% interest subvention.
- ₹20 crore is allocated to install solar‑based charging units at auto stands.
- ₹1,000 crore more than last year is allocated for the employment guarantee scheme.
- ₹30 crore is allocated as government subsidy to organisations, groups and private individuals to set up retirement homes.
- ₹10 crore is allocated to provide on‑call volunteer services for elderly people who are isolated at home.
- The Advocate Welfare Fund will be increased to ₹20 lakh.
- ₹15 crore is allocated for an accident life‑insurance scheme for school students from Class 1 to 12.
- ₹50 crore is allocated for a new health‑insurance scheme for families outside the eligibility criteria of the Karunya health‑security scheme.
- ₹22.27 crore is allocated for an expanded marketing and distribution network for Kudumbashree products.
- ₹10 crore is allocated to develop the Centre for Development Studies (CDS) into a leading national centre of excellence.
- ₹10 crore is allocated for Kerala Kalakendram to set up permanent venues.