THIRUVANANTHAPURAM: Kerala, in 2026-27, will cross a milestone of Rs two trillion budget size. The upcoming state budget will be a future-ready document anticipating a hat-trick for the ruling LDF. Priority will be given to keep the growth momentum in higher education, development and welfare sectors, besides addressing the long-standing demands of government employees, it is learnt.
Being an election year, the budget carries political significance but programmes will not confine to fiscal populism, according to Finance Minister K N Balagopal. “It will be a realistic and practical approach to fuel the development momentum and address the economic challenges,” he says. Not revealing what is in store, the minister indicated that there will be favourable announcements for all sections of people, including social security pensioners and government employees.
In October 2025, ahead of the elections to the local self-governments, the government had raised the social security pension from Rs 1600 to Rs 2000 a month. As the election manifesto had promised Rs 2500, beneficiaries are expecting a further hike in the budget. Government employees, worried over the delay in clearing six installments of DA too look forward to a favourable announcement.
According to him, the government always showed a positive approach to employees despite the severe fiscal stress. “Ours is the only state which implemented Pay Revision during the Covid pandemic. This shows the government’s commitment to its employees. About Rs 50,000 crore was spent on social security pensions.
All these despite the losses worth Rs 2.5 lakh crore due to the ceiling cut in market borrowing and fall in central transfers,” he says. Research and development funding and ageing-friendly initiatives can be expected in the new budget. With an allocation of Rs 4,039 crore, Kerala was among the top-spending states for R and D in the current financial year. Of this, Rs 1810 crore was for the education sector and Rs 1015 crore for health and sanitation.
Kerala’s Budget Size (Cr)
2025-26 (BE): 1.98 lakh
2024-25 (RE): 1.78 lakh
2023-24: 1.59 lakh
2022-23: 1.58 lakh
Budget size is the total expenditure which the government plans to spend over the financial year out of its income and borrowings. It will include both Plan and non-Plan expenditure. At 7.54 lakh crore, Uttar Pradesh topped the country in budget size for 2025-26. It was followed by Maharashtra, 6.97 lakh crore, Tamil Nadu, 4.38 lakh crore and Karnataka, 3.82 lakh crore.
BE: Budget Estimate
RE: Revised Estimate