Presenting the final Budget of election-bound Kerala’s incumbent CPI(M)-led Left Democratic Front (LDF) government on Thursday (January 29, 2026), Finance Minister K.N. Balagopal unfurled a populist mix of big-ticket announcements and welfare sops, notably a proposal to make undergraduate education in Arts and Science colleges free, the 12th Pay Revision Commission and the Assured Pension Scheme with an April 1 launch date for government employees.
Mr. Balagopal’s Budget speech, the fourth lengthiest in the Kerala Assembly, featured a bevy of insurance schemes, wage hikes for scheme workers, and proposals for developing high-end development corridors for rare earth and defence-related industries.
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For government employees and pensioners, Thursday’s Budget speech is intended to bring cheer. Under the Assured Pension Scheme, employees will be eligible for 50% of the last basic pay as maximum pension. There will also be an option for shifting from the existing National Pension System (NPS) to the assured pension. The Pay Revision Commission will be asked to submit its report in three months’ time, the Finance Minister said. Thee remaining instalments of dearness allowance/dearness relief (DA/DR) will be paid in full. One DA instalment will be disbursed with the salary for February. The remaining instalments will be paid out with the salary for March.
Insurance schemes
A clutch of insurance schemes featured prominently in the Budget. The list includes an accident/life coverage for school students and autorickshaw and taxi workers, as well as a new health insurance initiative for families outside the ambit of the Karunya Arogya Suraksha Scheme. The Budget also assured a ‘Life Saver Scheme’ ensuring cashless treatment for road accident victims for the first five days.
The monthly wages of ASHA workers, pre-primary teachers, Anganwadi workers and Saksharatha Preraks have been enhanced by ₹1,000 each, and that of anganwadi helpers workers by ₹500. The daily wage of noon-meal workers in schools has been increased by ₹25.
On making undergraduate education free, Mr. Balagopal later explained that it will be applicable to government and aided colleges. Education is currently free up to the Plus Two level in the State. Later, speaking to the press, Mr. Balagopal picked as the “highlight” of his speech a ₹1,000-crore allocation for pursuing the employment guarantee scheme, noting that the Centre’s decision to replace the Mahatma Gandhi National Rural Employment Guarantee Scheme entails a “heavy blow” to the State.
With respect to infrastructure development, the Budget announced a new ‘Rare Earth Corridor’ linking the Vizhinjam port to Chavara and Kochi. An amount of ₹100 crore has been earmarked for establishing a Rare Earth Critical Minerals Mission in partnership with Kerala Minerals and Metals Ltd (KMML), KELTRON and the Non-Ferrous Materials Technology Development Centre (NFTDC), Hyderabad. The second is a Defence Technology Innovation Hub interlinking defence and space institutions in the State. The Budget has earmarked ₹50 crore for it.
Other major allocations on the infrastructure front include ₹100 crore for the Regional Rapid Transit System (RRTS) – a north-south rail corridor for which the Kerala Cabinet had given clearance on Wednesday – ₹3,750 crore for the Sthree Suraksha Pension Project ₹400 crore for the Connect to Work scheme which the LDF government had announced in October 2025. The Budget also earmarked ₹14,500 crore for the payment of social security pensions during 2026-27.
Notably, the Budget speech lacked proposals for additional resource mobilisation. However, it has been decided to allow municipalities and Corporations to issue ‘municipal bonds’ “implementing major projects which are profitable as well as beneficial to the public,” Mr. Balagopal said. This is a prime recommendation of the 7th Finance Commission whose Part 1 report was tabled in the Assembly alongside Budget documents.
Mr. Balagopal dedicated large parts of his Budget speech to meticulously listing out sector-wise achievements of the LDF government, which has held power for two terms, emphasising how “continuity in rule” has helped lay the foundations for a developed Kerala.
Sector-wise outlays
Among sector-wise outlays, the Budget has earmarked ₹2,071.95 crore for agriculture, ₹318.46 crore for animal husbandry, ₹128.05 crore for dairy development, ₹239.12 crore for fisheries, ₹288.60 crore for forest and wildlife conservation, ₹623.85 crore for irrigation and flood control, ₹1,309.84 crore for energy, ₹1,417.26 crore for industries, and ₹242.34 crore for traditional industries. Other allocations include ₹20 crore for a ‘VS Centre’ in Thiruvananthapuram in memory of former Chief Minister V.S. Achuthanandan, ₹80 crore each as part of Kasaragod, Idukki, Wayanad and Kuttanad development packages, ₹30 crore for Sabarimala master plan.
Mr. Balagopal’s sixth Budget envisages revenue receipts of ₹1,82,972.10 crore and revenue expenditure of ₹ 2,17,558.76 crore in 2026-27.
Published – January 29, 2026 02:53 pm IST
