Kerala Budget 2025-26 updates: Finance Minister says State has survived most intense phase of financial crisis

BJP State president K. Surendran has termed the Kerala Budget 2025-26 “dispiriting.”

Addressing a press conference in Kozhikode, Mr. Surendran said the Budget fell flat of expectations and dismally failed in holding forth a coherent plan to mitigate the State’s crippling fiscal crisis. 

Kerala Chief Minister Pinarayi Vijayan has stoutly defended the Kerala Budget 2025-26 as “an illuminating roadmap thoughtfully and empathetically calibrated to give a new impetus to the State’s aspirations.”

He said the Budget sought to circumvent the Central government’s financial constraints imposed on the State to ensure sustainable development, social welfare, and a high physical quality of life index for Kerala. 

Kerala’s Leader of the Opposition V.D. Satheesan has termed the Budget a “false and cruel construct that rang resoundingly hollow and held no promise for the State”

He said the Budget has “exacerbated” the cost of living crisis for working-class people by proposing an “unreasonably high” 50% increase in land tax. Mr. Satheesan demanded that the government roll back the increase or brace itself for intense street agitations.

In order to promote more public transport buses on the road, Government has decided to reduce the quarterly road tax by 10%. The total revenue from Stage Carriage is ₹90 crore per annum at present. With this reduction of tax, State will lose ₹9 crore.

Quarterly tax on contract carriages registered within the State with seat capacity of 6 to 12 seats will be commonly levied at ₹350/- per quarter per seat instead of the existing differential rates of ₹280/- for Ordinary seat, ₹450 per Pushback seat and ₹900/- per sleeper seat.

Quarterly tax on contract carriages with seat capacity of 13 to 20 seats will change from the existing rates of ₹480/- per ordinary seat, ₹680/- per pushback seat and ₹1350/- for sleeper seat to a common rate of ₹600/-.

Quarterly tax on contract carriages with seat capacity of 20 and above will change from the existing rates of ₹680/- per ordinary seat, ₹900/- per pushback seat and ₹1800/- per sleeper seat to a common rate of ₹900/- per seat.

Quarterly tax on heavy passenger sleeper berth buses (contract carriages) at present is ₹1800/ which will be reduced to ₹1500/- per sleeper berth per quarter. The total revenue from contract carriage is ₹292 crore per 231 annum at present. With the simplification of tax, State will earn ₹15 cr. more.

Budget estimate for 2025-26 fiscal

Land tax has been hiked substantially

Finance Minister K.N. Balagopal concludes his Budget speech

Court fees to go up based on the recommendations of a committee appointed by the government, Mr. Balagopal siad. Additional revenue of ₹150 crore expected by the government through the revision.

Taxes on electric vehicles to go up, the Finance Minister added.

Allocation for Kerala Development and Innovation Strategic Council (K-DISC) increased to ₹50 crore.

- S.R. Praveen

5% enhancement has been announced by Mr. Balagopal in wages for daily wagers in government sector.

₹104 crore allocated for minority welfare.

₹54 crore earmarked to upgrade village offices as smart offices.

₹2063.99 crore allocated for market intervention schemes.

A project to promote entrepreneurship among Scheduled Tribe population gets an allocation of ₹10 crore.

- S.R. Praveen

₹15 crore earmarked to establish advanced imaging facilities including interventional radiology devices at Kollam, Kottayam, Manjeri, Kannur and Alappuzha Medical Colleges.

- Sarath Babu George

Ayyankali Urban Employment Guarantee Scheme gets an allocation of ₹180 crore.

₹185 Crore allocated for Kerala Solid Waste Management Project.

- S.R. Praveen

Kerala State Chalachitra Academy, the organiser of International Film Festival of Kerala, gets an allocation of ₹14 crore.

- S.R. Praveen

Social security pension dues amounting to over ₹3000 crore will be cleared in a time-bound manner, the Finance Minister said.

Mid-day meal scheme for school students gets an allocation of ₹402 crore.

- S.R. Praveen

Kerala State Road Transport Corporation (KSRTC) gets an allocation of ₹178.98 crore.

- S.R. Praveen

Allocation of ₹5 crore to develop a new biological park under the Forest Department in Kozhikode.

₹10 crore allocated to establish a supercomputing centre for computation modelling and simulation.

Chief Minister’s Researchers Scholarship announced in the Budget. Regular, full-time research students to receive monthly fellowship of ₹10000 under the scheme.

- Sarath Babu George

The Finance Minister announces a new project to treat people from economically disadvantaged sections for ailments other than communicable diseases at referral hospitals. For this, allocations of ₹45 crore has been made for the cath labs at Alappuzha, Kozhikode and Ernakulam Medical Colleges; and ₹10 crore for the cath lab at Thiruvananthapuram Medical College.

- Sarath Babu George

Finance Minister says that Kerala will this year become the first State to have dialysis units in all general hospitals and taluk hospitals. All district hospitals to have stroke units.

- S.R. Praveen

Budget allocates ₹5 crore for the proposed Biological Park at Perambra in Kozhikode district. Initially, the proposal was to establish a Tiger Safari Park on a 280-acre plot owned by the Plantation Corporation of Kerala at Perambra within the Malabar Wildlife Sanctuary. Now the name has been changed to Biological Park to adhere to the guidelines of the National Tiger Conservation Authority.

- Biju Govind

Institute Of Advanced Virology gets an allocation of ₹50 crore

Kerala House to be developed in Hyderabad. Initial allocation of ₹5 crore made towards the project.

- Sarath Babu George

₹5 crore has been earmarked for Emerging Technology Hub project, the Finance Minister said.

- Sarath Babu George

₹3.8 crore allocated for Graphene-Aurora programme, a joint initiative of the Digital University Kerala and the the Ministry of Electronics and Information Technology.

₹4.5 crore allocated for the India Innovation Centre for Graphene.

- Sarath Babu George

KFON, Kerala’s public sector Internet service provider, gets an allocation of ₹100 crore.

Space Park gets an allocation of ₹52.05 crore.

- S.R. Praveen

IT sector gets a total allocation of ₹517.64 crore. New IT policy in the final stages of preparation.

- S.R. Praveen

Battery Energy Storage System to be established at the Mylatti electrical substation in Kasaragod in 2026. Preliminary allocation of ₹5 crore made for the project.

- Sarath Babu George

Industries sector gets an allocation of ₹1831.36 crore. Finance Minister says that 31 private industrial parks have been allocated until now. ₹80 crore to promote entrepreneurship.

Coir sector gets an allocation of ₹107 crore.

₹27.92 crore allocated for medical devices park.

- S.R. Praveen

₹3.5 crore allocated to deveop Periyar, Anamudi, Nilambur, Wayanad elephant sanctuaries under Project Elephant. ₹2 crore for the Kottoor Elephant Rehabilitation Centre.

- Sarath Babu George

Fisheries sector gets an allocation of ₹295 crore

₹10 crore allocated to set up a new cattle feed farm at Nettukaltheri, Thiruvananthapuram.

- Sarath Babu George

₹120.93 crore allocated for Dairy Development sector.

A global dairy village will be established in Dharmadom, Kannur. The project will be undertaken in three phases with a total outlay of ₹130 crore. ₹10 crore allocated in budget.

Steps to address the menace of stray dog menace. ₹2 crore earmarked to study the feasibility of portable ABC centres.

- Sarath Babu George

Agriculture sector gets an allocation of ₹227 crore.

₹50 crore allocated as additional fund towards special package planned to mitigate human-wildlife conflicts in Kerala.

Mr. Balagopal also stresses the need for the Union and State govts to amend the laws to mitigate human-wildlife conflicts

- Sarath Babu George

A Financial Conclave will be organised to promote better financial management. ₹2 crore allocated

Government to strengthen the Cyber Wing of Kerala Police to counter cybercrimes.

Expressing concern over the rise in cyber fraud cases, the Finance Minister has announced a massive financial literacy campaign.

Project to promote toy making in Kerala involving MSMEs, Kudumbashree

Campus placements will be ensured for higher education students. Mega expos and regional job drives will be organised across the state. Job aspirants who have registered with the Digital Workforce Management System developed by Kerala Knowledge Economy Mission will benefit.

SC/ST students enrolment in the higher education sector will be doubled within 5 years

- Sarath Babu George

MT study centre to be set up near Thunchan Parambu in Tirur in memory of writer M.T. Vasudevan Nair who passed away recently. ₹5 crore allocated for the project.

- S.R. Praveen

‘Freedom Squares’, a project undertaken by the Kerala Startup Mission to promote interdisciplinary research, innovation and entrepreneurship will be expanded across the state. ₹2 crore allocated for the purpose.

- Sarath Babu George

Citizen budget to be published this year to make available the Budget announcements in an easy to understand format for the lay person.

S.R. Praveen

Government to establish world-class GPU cluster at Thiruvananthapuram to transform the state into a hub for AVGC (Animation, Visual Effects, Gaming, and Comics). ₹10 crore for preliminary works in this regard.

- Sarath Babu George

₹212 crore allocated for the development of a permanent campus for Digital Science Park

Special package announced for coastal development. Geotube offshore breakwater project for coastal protection to get ₹100 crore.

Punargeham coastal housing project gets an allocation of ₹20 crore. A total of 2428 individual houses and 390 flats completed till now under the project.

The Finance Minister said the govt will look at ways and means to generate income from KIIFB-funded projects. A feasibility study done recently for collection of a user fee on KIIFB-funded roads has come under criticism.

- S. Anandan

A project called ‘New innings’ was announced by Mr. Balagopal to promote entrepreneurship among senior citizens.

- S.R. Praveen

Green hydrogen valley project has been planned to promote the use of renewable energy., the Finance Minister said. The project will be implemented on PPP mode. ₹5 crore earmarked for initial-phase works.

- Sarath Babu George

Government to provide loans upto ₹10 crore to startups under the Expand your office project.

- S.R Praveen

Administrative sanction accorded for seven Centres of Excellence that had been announced in the previous budget. A first-phase allocation ₹25 crore has been made to establish these centres.

- Sarath Babu George

₹7 crore announced for Kochi Muziris Biennale 2025-26.

₹69 crore allocated to establish Centre for Neurodegeneration and Brain Health at CUSAT.

₹62 crore to establish Centre for Nanoscience and Nanotechnology at MG University.

Global Capability Centres focusing on R&D, advanced analytics, product management and digital transformation will come up in Kerala. These centres will provide job opportunities for Science, Technology, Engineering and Mathematics graduates. Budget allocates ₹5 crore to conduct a feasibility study, and ₹2 crore to organise an international conclave.

- Sarath Babu George

The Outer Area Growth Corridor project involving the development of an 63-km Outer Ring Road connecting Vizhinjam and Navaikulam in Thiruvananthapuram will be undertaken. Suburbs including Vizhinjam, Kovalam, Kattakada, Nedumangad, Vembayam, Kilimanoor and Kallambalam will be developed as economic nodes.

- Sarath Babu George

As part of Revenue generating projects under Kerala Infrastructure Investment Fund Board (KIIFB), two IT parks to be set up.

Hundred new infrastructure projects to be implemented next year utilising unused land possessed by local bodies across the State.

₹5 crore allocated for a project to make use of the large number of unoccupied homes for tourism purposes and generate revenue for the owners. To be piloted within 10 kms of major tourist destinations including Fort Kochi, Kumarakom.

- S.R. Praveen

Finance Minister announces development of economic zones attached to the coastal highway which is currently being developed.. 68 land parcels to be acquired for the project.

Once acquired, these will be developed to have beach promenades, hydrogen refuelling centres, cycle tracks, etc.

Vizhinjam-Kollam-Punalur development growth triangle project was announced. Involves setting up of production unit, assembling units, rail lines connected to the Vizhinjam Port.

Mr. Balagopal said the government will direct industrial investments towards major projects including the Vizhinjam-Kollam-Punalur development growth triangle; industrial ventures near the West Coast Canal and Coastal Highway; Thiruvananthapuram Outer Ring Road; Global Capability Centres; IT Parks and IT Corridors.

Karunya Arogya Suraksha Padhathi (KASP) gets an allocation of ₹700 crore. ₹3967.3 crore already spent for the scheme.

The KASP health insurance scheme covers nearly 42 lakh families in Kerala.

- S.R. Praveen

Finance Minister says that the spendings of the LDF government increased from ₹1.17 lakh crore in the previous term to ₹1.64 crore lakh crore in the current term. Spendings increased by 40% despite the financial situation caused by fall in tax shares from the Union government.

- S.R. Praveen

Finance Minister attributes Kerala’s improved financial situation, despite the fall in Union government’s tax share, to increase in own tax collection by 70% in four years.

- S.R. Praveen

Mr. Balagopal accuses the Centre of consistently reducing Kerala’s share in the divisible tax pool from 3.88% in the 10th finance commission period to 1.92% in the 15th finance commission period.

- S. Anandan

Special incentives to attract tourists to the state. Tour packages and food courts providing the famed cuisines of Kerala will be arranged.

- Sarath Babu George

The preliminary work for Thiruvananthapuram metro rail will begin in 2025.

- S.R. Praveen

The government will adopt steps to rein in uncontrolled emigration. Many persons, including higher education institutions, have opted to migrate without understanding the pitfalls of the destinations of their choice, the Finance Minister said.

- Sarath Babu George

Urban Policy will be implemented from this year. Metropolitan planning committees for Thiruvananthapuram, Kochi and Kozhikode.

- S.R. Praveen

50 research projects will be allocated for higher education institutions to promote research and development.

The Finance Minsiter reiterates the government’s commitment to turn Kerala into a hub of higher education. He said the government will intensify efforts to attract foreign students and spur research in the state.

- Sarath Babu George

Finance Minister announces ₹750 crore for rehabilitation and rebuild initiatives in landslide-hit Wayanad. Criticies the Union government for not providing aid.

- S.R. Praveen

Kerala’s economy is primed for a take-off, thanks to the stringent fiscal consolidation measures, Finance Minister K.N. Balagopal said. Domestic production has increased, he added.

The service pension arrears of government employees will be cleared in February, Mr. Balagopal said

- Sarath Babu George

Finance Minister K.N. Balagopal presents the Medium Term Fiscal Policy and Strategy Statement before the House.

- Sarath Babu George

Leader of the Opposition V.D. Satheesan criticises the State government for not placing the Economic Review on the table a day prior to the Budget.

Finance Minister K. N. Balagopal said that Kerala was slowly emerging from the more intense phase of a financial crunch and that the 2025-26 State Budget to be presented by him today would feature several schemes and announcements helpful to the economy. 

The minister’s remarks came in a Facebook post an hour before the budget, his fifth, was scheduled to be presented in the State Assembly.

The state government has tried its best to ensure that the financial crisis did not affect the development and social welfare commitments of the government, he added.

The 2025-26 Kerala Budget will focus on accelerating the growth process that has been set in motion in the State, new investment models, and sustaining the pace on welfare spending, Finance Minister K.N. Balagopal said.

At a pre-Budget chat, Mr. Balagopal said he was satisfied with his performance as Finance Minister, expressing confidence that Kerala would be moving forward, and not backward, in the coming fiscal. Things were looking up for the economy despite Kerala passing through its toughest phase in recent history, emerging from the COVID-19 pandemic, the destructive floods, and a fiscal crunch spawned by unprecedented cuts in central transfers, according to him. 

The Minister indicated that capital expenditure and spending on welfare measures would not be hit next year. On additional resource mobilisation, he said the State government had limitations in new taxation and hinted that nothing of unusual shock value was in the works. However, he drew attention to certain charges that had remained untouched for decades without getting updated.

The 2025-26 State Budget will be closely watched for measures designed to boost the economy and how Finance Minister K.N. Balagopal goes about the delicate task of balancing the Left government’s social sector commitments with the need to mop up additional resources from within a tight fiscal space. 

Mr. Balagopal’s upcoming Budget presentation garners considerable interest in the context of the Union Budget’s silence on Kerala’s pleas for special financial packages for rehabilitating the landslide survivors in Wayanad and tackling rising human-wildlife conflicts.