Kerala govt sets up 12th Pay Commission amid poll buzz, fiscal strain

Kerala has constituted its 12th Pay Revision Commission, setting in motion a review of state government employees’ salaries just weeks before Assembly elections expected in April-May. The decision, announced on Monday, follows a commitment made in the 2026-27 State Budget.

The government has asked the panel to submit its report within three months.

Composition and mandate of the commission

Former Chief Secretary V P Joy has been appointed chairman. The other members are advocate M Rajagopalan Nair and retired Additional Secretary Sreelatha Sukumaran.

V R Sobha, Additional Secretary in the Finance Department, will serve as the commission’s secretary.

Finance Minister K N Balagopal had announced the new commission in the 2026-27 Budget presented in the Kerala Assembly on January 29. The government has now issued formal orders appointing the body.

The panel has been tasked with submitting recommendations within three months. The government has said it will ensure the process is completed on time and that implementation will follow in a timely manner. A separate order detailing the commission’s terms of reference is to be issued.

In his Budget speech, the minister reiterated that successive Left governments have followed a five-year principle on pay revision.

Financial backdrop and previous revision

The announcement comes amid pressure from employees’ organisations, which have long sought the constitution of a new commission.

The 11th Kerala Pay Revision Commission, headed by K Mohandas, fixed the minimum basic salary of state employees and teachers at ₹23,000 and the maximum at ₹1,66,800. It also recommended raising the retirement age to 57, introducing a five-day week in government offices and ending the compassionate employment scheme in favour of improved financial benefits for families of employees who die in service.

Implementing the previous revision added financial strain. The government had incurred an additional liability of ₹25,000 crore. The 2021 revision created an immediate annual liability of ₹4,810 crore.

Salaries now account for nearly 30% of revenue receipts and pensions for about 21%. Together, more than half of the state’s revenue is spent on around 10 lakh employees and pensioners, roughly 3% of the population. In 2026-27, revenue receipts are projected at ₹1.83 lakh crore, with the combined salary and pension bill expected to exceed ₹90,000 crore.

Criticism and employee response

Policy experts have questioned the timing of the move, noting that commissions are often set up close to the end of a government’s term, allowing announcements before elections. Some argue the current fiscal position is more fragile than in the past and expect only limited increases.

They point out that Kerala’s salary and pension spending as a share of revenue is higher than the average among major states. Together with interest payments, these committed expenditures account for over 80% of revenue.