Kerala Finance Minister K.N. Balagopal has presented the Kerala Budget for the 2025-26 fiscal year, which was unveiled on February 7, 2025. The state has taken significant strides to address both immediate challenges posed by recent disasters and long-term development goals amid continued fiscal scrutiny.
One of the most notable announcements was the allocation of ₹750 crore for the rehabilitation of victims affected by the devastating landslides in Wayanad, which had resulted in tragic loss and destruction. Minister Balagopal highlighted the urgency of these funds, stating, "The financial crunch did not affect development activities, and Kerala is now ready for a takeoff." He emphasized the government's commitment to completing the rehabilitation on time.
Balagopal’s budget speech was filled with remarks about the state’s fiscal health, marking Kerala’s resilience even as the Finance Minister criticized the federal government. He pointed out the alarming trend of diminishing contributions from the Centre to the state's revenue, stating, "The central government did not show the same justice to Kerala as it did to other states." The finance minister expressed deep concerns about Kerala’s share of the divisible tax pool, which he noted had plummeted from 3.88% during the 10th Finance Commission period to just 1.92% in the 15th Finance Commission period.
Besides the emergency relief and rehabilitation funding, the budget included several significant allocations aimed at stimulating urban development across key cities like Thiruvananthapuram, Kochi, and Kozhikode. Balagopal announced plans for the formation of Urban Development Committees as part of the strategy to promote urbanization across the state. This includes early-stage plans for the launch of the Thiruvananthapuram Metro Rail within the 2025-26 fiscal year.
To support these commitments, there were announcements of tax increments affecting various sectors, particularly land and vehicle taxes. A shocking 50% rise on land tax and increased fees for court services is projected to generate additional revenue. The changes will apply to several categories of vehicle owners, with taxes on older private vehicles also increasing to regulate environmental impacts. While some of these modifications are anticipated to generate necessary funds, they face criticism from opposition leaders.
Within the budget, local governing bodies received increased allocations, underscoring the government's focus on grassroots development as well. Balagopal confirmed the allocation of ₹15,980.41 crore for local self-governing institutions, which is instrumental for community-level projects.
Balagopal introduced numerous welfare programs, including the Karunya Arogya Suraksha Padhathi (KASP) scheme aimed at providing healthcare to over 42 lakh families, where ₹700 crore has been set aside. The Minister also highlighted the housing crisis, stating provisions of ₹1,160 crore under the LIFE Mission project aimed at addressing housing shortages across the state.
The budget's emphasis on tourism also included new initiatives for health tourism, with ₹50 crore allocated to promote Kerala internationally as a key health destination. The state aims to leverage its advanced healthcare infrastructure and idyllic settings to attract global patients seeking medical treatment.
On the educational and technological fronts, Balagopal announced 50 new research projects targeting higher education institutions to bolster research and development, coupled with the establishment of new IT parks and centres focused on artificial intelligence and high-tech industries. A financial outlay of ₹293.22 crore was earmarked for these endeavors.
Despite the financial setbacks presented by the Centre, Balagopal remains optimistic about the state's economic prospects. He concluded his speech with remarks reinforcing the need for continued investment and development, stating, "We are ensuring welfare projects will not be impacted due to financial strains." The budget session, which began on January 17, is set to stimulate discussions on these proposed initiatives and the future path Kerala aims to take toward recovery and growth.