Kerala Budget 2026–27: LDF rolls out people-centric schemes ahead of Assembly polls

Thiruvananthapuram: The Kerala Budget for 2026–27 placed strong emphasis on government employees and pensioners, with Finance Minister K N Balagopal announcing the Assured Pension Scheme, complete clearance of pending Dearness Allowance (DA) and Dearness Relief (DR) arrears, and the constitution of the 12th Pay Revision Commission.

Presenting the second Pinarayi Vijayan-led government’s sixth and final budget in the Legislative Assembly, Balagopal confirmed that all DA and DR arrears would be fully settled, with one instalment to be paid along with the February salary and the balance with the March pay. The 12th Pay Revision Commission, continuing Kerala’s practice of revising salaries every five years, is expected to submit its report within three months.

On pensions, the Finance Minister formally announced the Assured Pension Scheme, which will replace the contributory National Pension System (NPS) for eligible employees. Under the new system, retirees will be entitled to up to 50 per cent of their last drawn salary, including Dearness Relief. Employees currently covered under the NPS will have the option to shift to the assured pension framework. A separate mechanism will be put in place to manage government contributions, with detailed guidelines to be issued by April 1. “The budget aims to ensure fair pay and financial security for government employees while continuing Kerala's growth trajectory,” Balagopal said.

Apparently eyeing the upcoming assembly elections, the Left Democratic Front (LDF) government also rolled out a series of people-centric welfare measures, earmarking ₹14,500 crore to strengthen social security pensions and fund new community programmes.

The Finance Minister announced a monthly hike of ₹1,000 in the honorarium of Accredited Social Health Activists (ASHA) and Anganwadi workers, while Anganwadi helpers will receive an additional ₹500. Pre-primary teachers and literacy mission motivators will see a ₹1,000 increase in their monthly pay, and daily wages of school cooking staff have been raised by ₹25.

The budget allocated ₹3,700 crore for the Chief Minister’s Sthree Suraksha Scheme and increased funding for the rural employment programme by ₹1,000 crore compared to previous years. It also announced life and health insurance schemes covering all categories of people, including school children, and free degree education for students in arts and science colleges.

Infrastructure and environment-focused allocations featured prominently as well. The budget set aside ₹100 crore for preliminary works on the Regional Rapid Transit System (RRTS) corridor from Thiruvananthapuram to Kasaragod, which received in-principle cabinet approval earlier this week. Around ₹150 crore was earmarked for coastal development, while over ₹250 crore was allocated for forest and wildlife protection.

Addressing the autorickshaw sector, Balagopal announced a green transition package aimed at protecting workers hit by rising fuel prices and central policies. A one-time scrappage bonus of up to ₹40,000 will be provided to those replacing old petrol and diesel autos with electric vehicles. In addition, a 2 per cent interest subsidy will be offered on loans taken from selected public sector banks for purchasing electric autorickshaws.

“Rs 20 crore is set apart for executing these schemes,” the Minister said.

The government also plans to convert over 5,000 informal autorickshaw stands into smart micro hubs. “Worker friendly auto stands, suitable for each area, will be constructed. Facilities, including solar based charging units, will be equipped there. Rs 20 crore will be set apart for this scheme,” Balagopal said.

Focusing on women’s healthcare, the budget announced an allocation of ₹3 crore to establish specialised menopause clinics in district hospitals. The clinics will offer medical consultations, mental health counselling and screenings for heart, bone and hormonal health, along with medicines and guidance under one roof. Kerala follows Maharashtra, which launched similar clinics in government hospitals earlier this month.

In his budget speech, Balagopal criticised the Centre, alleging that it was “strangling” Kerala by cutting down its tax revenues. “Despite severe neglect, Kerala has progressed,” the Finance Minister said.

The Budget presentation has concluded, setting a record for its duration. Finance Minister K N Balagopal, who began his speech at 8 am, completed it at 11.53 am.
After Thomas Isaac and Oommen Chandy, this is the fourth-longest Budget speech in the history of the Kerala Legislative Assembly. The presentation lasted two hours and 53 minutes.