The Revised Budget 2026–27, presented on June 19, 2026, lays out Kerala’s shift toward an investment-led, technology-driven economy under the vision of “Puthuyuga Keralam” (New Age Kerala). It comes at a time of heavy fiscal pressure, including an accumulated debt burden of ₹87,012 crore and widening revenue gaps, and focuses on industrial growth, governance reform, and social protection.
Fiscal Position and Financial Framework
The state faces a tight financial situation with high debt and limited fiscal space. The plan outlay has been cut from ₹35,750 crore to ₹30,370 crore due to revenue shortfalls. Kerala’s total debt stands at ₹5.07 lakh crore, while committed expenditure like salaries, pensions, and interest takes up 77% of revenue receipts. Interest payments alone account for 20.9%, and capital expenditure remains low at 1.3% of GSDP. An Expert Committee will be formed to restructure KIIFB and review its borrowing framework.
Key Budget Figures (2026–27)
- Revenue Receipts: ₹1,69,646.37 crore
- Revenue Expenditure: ₹2,05,001.67 crore
- Revenue Deficit: ₹35,355.30 crore
- Capital Expenditure: ₹19,651.41 crore
- Public Debt: ₹52,364.13 crore
- Additional Expenditure: ₹1,080.95 crore
- Year-end Deficit: ₹1,504.63 crore
Strategic Flagship Projects
Mission Samudra (₹400 crore) aims to build a unified port and coastal economy, linking Kerala’s long coastline with major maritime infrastructure including Vizhinjam and boosting coastal employment. Economic corridors include the Southern Kerala Economic Corridor (₹50 crore) and a Rare Earth and Critical Minerals Corridor (₹100 crore) to cluster industrial development. Invest Keralam, a single-window digital system, will streamline approvals and reduce delays for investors. In education and healthcare, Kerala Knowledge Valley (₹100 crore), Kerala Health and Life Sciences City (₹100 crore), and Wayanad Tribal University (₹50 crore) are planned. Industrial hubs include a Global Furniture Hub and Global Gold Hub, while ₹50 crore is allocated for AI, robotics, and immersive tech including a Malayalam AI initiative. ₹20 crore is set aside to revive light metro projects in Thiruvananthapuram and Kozhikode.
Welfare and Social Sector Initiatives
The Indira Guarantee allocates ₹600 crore for free KSRTC travel for women and transgender persons. Salary increases are announced for Anganwadi workers, pre-primary teachers, mid-day meal staff, and ASHA workers. The Oommen Chandy Health Insurance Scheme offers coverage up to ₹25 lakh per family with initial funding support.
Agriculture, Fisheries and Rural Economy
Rubber support price is increased to ₹250 per kg. Milk production is targeted to rise to 1 crore litres per day with focused investment. Fisheries gets additional allocation with higher subsidies and land rights for coastal residents, along with increased kerosene subsidy for fishermen.
Environment, Infrastructure and Public Works
Land reforms will be modernised through updated laws, faster conversions, and a land bank system. A ₹100 crore climate and renewable energy programme will support solar, hydrogen, and hydro projects, targeting carbon neutrality by 2050. The Public Works Department, with ₹5,952.29 crore allocation, will upgrade roads under a new road architecture system.
Education, Health and Safety
New anti-ragging measures include a student distress app and stronger legal framework. Operation Toofan, with ₹10 crore allocation, targets drug networks around educational institutions.
Revenue and Tax Reforms
Settlement schemes are introduced for flood cess arrears and older tax dues, offering relief under specific conditions. Tax slabs for alcohol-based products and vehicle taxation are revised, with EVs taxed lower in entry and mid segments while luxury EVs are taxed higher. Tourist transport vehicles get tax concessions to boost the sector. Land valuation and digital stamp duty reforms aim to improve transparency and ease transactions.
The budget attempts to balance fiscal correction with structural transformation. While addressing heavy debt and revenue stress, it pushes investment, industrial clustering, digital governance, and green transition as core pillars of Kerala’s long-term development under the Puthuyuga Keralam vision.
