THE 2025-26 Kerala Budget anticipates revenue generation of Rs 2 lakh crore and proposes an expenditure of an equivalent amount. This means Kerala’s budget has grown to the size of Rs 2 trillion.

Even minute changes in society have been analysed, and the global situation has been accurately assessed while formulating strategies for Kerala’s future. The budget takes a serious view of key trends in the state, such as rapid urbanisation, a growing senior citizen population, increasing emigration, and a drastic decline in birth rates. All these factors were considered while outlining the state’s future development priorities.

This budget speech began by highlighting Kerala’s recovery from the adverse phase of a severe economic crisis. Despite economic sanctions imposed by the central government, the state managed to fund development initiatives and welfare measures. The past three years were marked by economic challenges, but prudent financial vigilance and well-planned resource management enabled steady progress in the path of development.

Kerala has significantly increased its own revenue – from Rs 47,660 crore in 2020-21 to an estimated Rs 81,000 crore by the end of 2024-25. The revenue deficit has also declined, from 2.25 per cent in 2021-22 to 1.58 per cent in 2023-24. Despite losing around Rs 50,000 crore per year from the centre pool due to reduction in the borrowing limits, the stopping of GST compensation, cuts in centrally sponsored schemes, and the discontinuation of revenue deficit grants, Kerala has fought its way forward.

The development and welfare measures implemented by the first and second LDF governments led by Pinarayi Vijayan have been unprecedented. The government has taken significant steps towards the Left Democratic Front’s vision of a new, modern Kerala, achieving remarkable progress in development, welfare, and the knowledge sector. The transformations in infrastructure have drawn widespread admiration.   

VIZHINJAM HARBOUR AND SIX-LANE HIGHWAY

The Vizhinjam Harbour and the six-lane national highway will serve as the driving forces behind Kerala’s development in the coming decades. Once the national highway is completed, travel time from the southern tip to the northern end of Kerala will be significantly reduced. These high-speed connectivity projects will ensure that the benefits of industrial growth – centered around Vizhinjam Harbour – reach every corner of the state.

A major highlight of this budget is the proposed Vizhinjam-Kollam-Punalur Development Triangle, which is expected to accelerate progress in South Kerala. This comprehensive project will attract massive investments and spur large-scale development across vast stretches of land along key transport routes, including national highways, state highways, MC roads, and railway networks. The government has taken all necessary steps to complete the Vizhinjam Port by December 2025 – three years ahead of the initial 2028 deadline. Unlike the usual trend of delays in infrastructure projects, early completion is becoming the new norm in Kerala, reflecting the state’s transformative progress across multiple sectors.

Another key budget announcement is the development of economic zones along the 1,800 km West Coast Canal, stretching from Thiruvananthapuram to Kasaragod. This initiative will boost productivity in tourism, industry, agriculture, and fisheries.

Global Capability Centers are entities set up to coordinate the functioning of the multinational corporates. All over the world, the GCCs are performing today as multipurpose centres facilitating many activities of the corporates like research, trade, employment training and digital transactions.

These centres are imparting training to aspirants, including those who have graduated in Science, Technology, Engineering and Mathematics (STEM), to introduce them to new technologies and global business trends. 50 per cent of the total number of GCCs in the world is in India. These centres generate a total annual turnover of $64.6 billion and provide employment to 1.6 million people. Kerala has the potential to become a major recipient of investments in GCCs. Kerala, with a strong presence of educated youth, will benefit immensely by welcoming GCC. Funds have been earmarked for taking up a pilot study of GCC sector and announcement made for organising a GCC conclave.

Astonishing transformations are taking place all over the world in the fields of energy, knowledge, information technology etc. Kerala needs to move along with these developments. Projects have been declared in the budget in the fields of bio ethanol and green hydrogen taking these factors into consideration. A hydrogen valley will be developed in the state to produce environment friendly hydrogen energy. Indian government’s policy of blending 20 per cent ethanol with petrol will be implemented during 2025-26. Budget visualises projects for making bio ethanol in the state. It will open up new opportunities for farmers. The bio ethanol sector will be developed to produce Rs 6000 to Rs 10,000 crore business.

We could make structural changes in the knowledge sector of Kerala. Government has taken various initiatives to utilise knowledge sector to help the economy. To advance research in the field of graphene, the India Innovation Centre for Graphene has been established. Additionally, the Kerala Medical Technology Consortium, the Centre of Excellence in Microbiome, and the Centre of Excellence in Nutraceuticals are among the institutions that have been created or are in the process of being established in cutting-edge technology fields. In continuation of these efforts, several programmes are planned in advanced technology areas.

Kerala's startup ecosystem is rated the best in India. According to the Government of India's rankings, Kerala holds the top position for its startup ecosystem. The state government provides extensive support to startups, making Kerala India's most business-friendly state. As a result, many national and international companies are investing in Kerala.

RAPID TRANSFORMATIONS

 The budget has introduced several measures to further enhance this investment and development environment. A new initiative, New Innings, has been announced to support enterprises led by senior citizens. And, decentralised work centres, known as Work Near Home, have been established. Various schemes are also in place to support and promote enterprises in small towns and rural areas.

Kerala is undergoing rapid transformation, with significant shifts in its demographic composition and social landscape. The state must evolve and advance in line with global changes in education and employment. These factors have been carefully considered in the formulation of the budget.

A large number of Keralites, particularly young people, are migrating to foreign countries for education and employment. However, the nature of recent migration differs from the earlier waves to Gulf countries. Today, many are moving to Europe and other developed nations not necessarily for better jobs or higher education at reputed universities. In fact, the economic and social conditions in several of these destination countries are deteriorating.

It is noteworthy that migration continues even when ample opportunities exist within Kerala. Many people are working abroad for lower wages than they could earn in Kerala. Given this trend, we must anticipate that in the near future many migrants would return to the state. They can take advantage of emerging employment opportunities in newly developing areas such as Vizhinjam.

As more people migrate to urban areas, issues related to housing, waste disposal, roads, sanitation, and water supply will increase, necessitating greater government intervention. Even Kerala’s rural areas are becoming increasingly urbanised. Every ten to fifteen kilometres, there are numerous small towns across the state. Given this trend, municipalities can and should take on more responsibilities to address the growing demands of the population. To support this, municipalities are now permitted to issue bonds to raise funds.

A project for establishing housing cooperatives in urban areas and constructing housing complexes has been announced in the budget. These cooperatives will receive subsidies to facilitate affordable housing for different sections of society. This scheme will be particularly beneficial for employees, including government employees, who can utilise this scheme.

Kerala, known for its scenic beauty, has immense potential to develop its tourism industry. Several infrastructural projects have been implemented to attract both domestic and international tourists. However, the state faces a shortage of hotel rooms. To address this, the budget has introduced a scheme through the Kerala Financial Corporation (KFC) offering a loan of Rs 50 crore. Additionally, a new initiative, K-Homes, has been announced to repurpose vacant houses in Kerala for use in the tourism sector.

LDF: THE GUARANTEE FOR KERALA’S DEVELOPMENT

The Left Democratic Front (LDF) is the guarantee for Kerala’s future development and social welfare. Only the LDF can ensure social security pensions, benefits for workers, employees, and farmers. Programmes such as the Life Housing Scheme, Karunya Health Benefit Scheme, and social security pensions for approximately 60 lakh people continue uninterrupted solely because the LDF is in power and committed to the people.

At a time when the central government is aggressively privatising public sector units, Kerala has adopted a completely different approach by protecting and strengthening the public sector. Kerala also leads India in Public Service Commission (PSC) recruitments, accounting for about 65 per cent of total PSC recruitments in the country. Public schools and government hospitals in Kerala maintain high standards, and the state's public distribution system serves as a model for other states. Kerala has conducted a survey of extremely poor families and identified 64,006 households. The state government has designed a programme to bring them out of extreme poverty by November 2025.

The benefits of wage revision for state government employees were made possible only because the LDF-2 government led by Pinarayi Vijayan followed the first. The government has allocated Rs 7,090 crore to support KSRTC until March 2025, while the LDF-1 government had released Rs 4,823 crore for KSRTC. In contrast, the previous UDF government provided only Rs 1,220 crore over five years. Even during this crisis period, the wage revision for KSRTC employees was implemented, reflecting the LDF government’s unwavering commitment to the public sector and its workers.

Social Security Pension of Rs 1,600 per month is distributed regularly to around 60 lakh people, covering one-sixth of Kerala’s population. Karunya Health Benefit Scheme is extended to 42 lakh eligible families. Kerala is one of the states that provides highest remunerations to ASHA workers, Anganwadi workers, and mid-day meal scheme workers. 42,78,736 houses have been built for homeless families under the Life Housing Scheme.

While ensuring social security and welfare measures, the LDF-led government continues to undertake developmental activities for Kerala’s future. Under the leadership of the CPI(M), Kerala is on the path to becoming a developed society while taking care of the poor and needy. All these initiatives demonstrate that the LDF is the only guarantee for the welfare of Kerala’s people.