Kerala Finance Minister K.N. Balagopal has presented a balanced, realistic and practical Budget that effectively integrates welfare measures while maintaining focus on development initiatives. This milestone Budget, which surpasses ₹2 trillion for the first time, seeks to address the State’s economic, demographic, and operational realities while maintaining fiscal prudence.
Also read: Kerala Budget 2026 highlights
Kerala is undergoing rapid urbanisation, with the urban population projected to reach 80% by 2051. In response, the State is set to formulate a first-of-its-kind urban policy that is both comprehensive and inclusive. Major developmental initiatives—such as the proposed Regional Rapid Transit System (RRTS), the widening of the MC Road, and the expansion of inland water transport—are envisioned to enhance connectivity and improve accessibility while allocations for the ‘Thanteyidam’ Housing Project and the Kerala Solid Waste Management Project are expected to ensure that this transition remains as seamless and sustainable as possible.
The Budget also earmarks resources to address the other significant demographic transition currently unfolding in Kerala. According to an RBI study, nearly 20% of Kerala’s population is aged above 60 years, and this share is projected to rise to around 23% by 2036. In view of this demographic shift, the Budget announced several initiatives aimed at strengthening the ‘Care Economy’ and the ‘Silver Economy.’ The proposed support for organisations, groups, and individuals to establish retirement homes and ‘Co-Op Care’ geriatric and palliative care centres, along with the creation of a volunteer force at the local level to assist elderly citizens, is expected to play a significant role in ensuring that senior members of society are not left behind.
Initiatives such as the proposed ‘Rare Earth Corridor,’ SEMICON Kerala, and the Emerging Technologies Mission are expected to significantly strengthen the State’s information technology ecosystem.
The proposed Malayalam Language Model Challenge, aimed at developing and training a high-quality Large Language Model in Malayalam, will help ensure that the advancements in technology remain inclusive and accessible. The ‘Mission 1,00,000,’ which seeks to upgrade one lakh nano and micro enterprises, along with the Entrepreneur Support Scheme (ESS) and the Special Package Scheme for Micro, Small, and Medium Enterprises, is expected to help the State maintain its position as the leading performer in the Ease of Doing Business rankings.
Welfare measures
Despite significant allocations for developmental activities, the government has remained steadfast in its commitment to welfare measures. The revised wages for Anganwadi workers and Accredited Social Health Activists, the support extended to autorickshaw workers, and the enhanced medical insurance coverage under Medisep 2.0 are all expected to provide substantial assistance at the grassroots level. It is reassuring to note that all of this has been achieved without exerting significant pressure on the State’s fiscal deficit.
In conclusion, despite this being the final full Budget before the Assembly election, the government has not hesitated to present a responsible and realistic Budget that can effectively guide the State’s activities in the forthcoming financial year.
(The author is Senior Vice President & Head – Planning, Federal Bank)
Published – January 30, 2026 11:57 am IST
