Kerala has announced a major technology and startup push, including a dedicated Rs 50 crore fund for Gen-Z entrepreneurs and a first-of-its-kind Malayalam Artificial Intelligence initiative, as Chief Minister VD Satheesan presented the revised State Budget for 2026-27 on Friday.
Presenting his maiden Budget in the Assembly, Satheesan acknowledged the state’s financial difficulties but said the government would pursue a long-term development strategy aimed at building a “New Age Kerala” through investments, innovation, welfare programmes and infrastructure expansion.
The Budget allocates Rs 50 crore to support young entrepreneurs and innovators from Generation Z. The initiative is designed to encourage participation in startups, research institutions and innovation ecosystems, with a focus on emerging technologies such as Artificial Intelligence, robotics, data science, Internet of Things and virtual reality.
“This generation will become an important driving force of the future economy and industries,” the Chief Minister said.
Malayalam AI initiative gets dedicated funding
In a significant technology announcement, the government allocated Rs 10 crore to create an open Malayalam language dataset and support the development of indigenous AI models.
Satheesan said Malayalam should not be left behind as AI technologies reshape economies and public services. The initiative is expected to strengthen local language capabilities in the AI ecosystem.
The government also highlighted Kerala’s decision to establish a dedicated AI portfolio to coordinate policy, startups and ethical AI development.
Mission Geo Keralam to drive spatial governance
The Budget introduced ‘Mission Geo Keralam’, a project that seeks to integrate geospatial intelligence into governance and public administration.
Under the plan, the Kerala State Remote Sensing and Environment Centre (KSREC) will be developed into the state’s primary geospatial institution. An integrated Kerala Geospatial Intelligence Platform (KGIS) will also be created.
According to the government, AI-powered analytics and real-time spatial data will be used to improve governance and planning. A corpus fund will be established to support the initiative.
Budget presented amid financial challenges
Opening his speech with details from the White Paper on Kerala’s finances, Satheesan said the state was facing a severe fiscal crisis.
The revised Budget follows a reported revenue shortfall of Rs 20,500 crore arising from earlier projections. The Chief Minister told the Assembly that the state’s total liabilities, including those linked to the Kerala Infrastructure Investment Fund Board (KIIFB) and the Social Security Company, stood at Rs 87,012 crore.
He also announced that an expert committee would examine the functioning of KIIFB.
The government said upcoming salary and pension revisions, along with the restoration of leave surrender benefits, would place additional pressure on state finances.
Investment, jobs and industry at the centre of growth strategy
Despite the fiscal stress, the Budget placed strong emphasis on investment and employment generation.
A Kerala MSME Growth Scheme was announced to facilitate the establishment of 10,000 micro, small and medium enterprises across the state through financial support, revolving funds and expert guidance.
The government will also set up an Invest Kerala Cell as a single-window platform to assist investors with approvals, land-related issues and project facilitation.
Kozhikode Cyber Park is set for a major makeover. The government said it will be developed along the lines of Infopark Kochi and Technopark Thiruvananthapuram. The move is expected to bring more IT companies and jobs to north Kerala.
Maritime economy, healthcare and higher education in focus
The government also unveiled ‘Mission Samudra’ to strengthen Kerala’s coastal economy. The plan focuses on better linking ports with roads, railways and inland waterways. It also includes proposals to expand port-led development and related industries across the state.
Plans include developing Kerala as a port city, establishing a shipbuilding centre at Vizhinjam and strengthening port infrastructure in Kollam, Beypore and Azhikkal.
In healthcare, the Budget introduced the Oommen Chandy Health Insurance Scheme, which promises treatment coverage of up to Rs 25 lakh per family. An initial allocation of Rs 10 crore has been made for the programme.
A Kerala Health and Life Science City will also be developed with an allocation of Rs 100 crore.
The government further proposed a Kerala Knowledge Valley to attract global universities and expand research and higher education opportunities.
The government also plans to focus on emerging technologies such as artificial intelligence, quantum computing and biotechnology. A new Future Readiness Think Tank will be set up to help shape policies for these sectors.
Welfare measures continue alongside growth plans
Alongside its investment push, the government said welfare programmes would continue to remain a priority. The Budget retains free bus travel for women on KSRTC services and promises better support for various scheme workers, including ASHA workers.
Additional allocations were announced for agriculture, fisheries and SC/ST welfare. The rubber support price will be increased from Rs 200 to Rs 250 per kg.
The government also announced initiatives focused on senior citizens, tribal healthcare, coastal communities, caregivers and rare disease treatment.
Tourism and culture featured prominently in the Budget, with proposals to recognise tourism as an industry, establish a film city in Kochi and create cultural centres and memorial projects across the state.
Satheesan said the revised Budget would serve as the roadmap for the government’s development and welfare agenda over the next five years.