Kerala Budget 2025: EV tax hike, ₹750 cr Wayanad relief and other major announcements

In a surprising Budet proposal, Kerala Finance Minister K.N. Balagopal has jacked up the lifetime tax on electric vehicles.

Presenting the 2025-26 Kerala budget, Balagopal raised the lifetime tax from the current 5 percent to 8 percent on vehicles priced over Rs 15 lakh. Those priced above Rs 20 lakh will be taxed at 10 percent. This would mean a Rs 20-lakh electric car will be charged Rs 2 lakh as lifetime tax.

The hike comes at a time when various state governments are promoting EVs by incentivising them. Kerala is one of the top states where electric vehicles are very popular and a substantial number of EVs are sold in the state every year.

Package for Wayanad victims

In a major step, the minister announced a Rs 750 crore project for the rehabilitation of Wayanad disaster victims. The Union Budget presented last week did not find a mention about the massive landslide in the Mundakkai area in Wayanad district which killed hundreds of people and caused widespread economic damage running into thousands of crores. Kerala had pinned its hopes on the Union Budget for big allocation for projects to provide relief to the Wayanad victims and to revive the reigon's economy.

Balagopal was very critical of the Union government for the alleged neglect of Kerala in the successive annual budgets of the BJP-led Modi Government. He also accused the Centre of consistently reducing Kerala’s share in the divisible tax pool from 3.88% in the 10th finance commission period to 1.92% in the 15th finance commission period.

He hoped the 16th Finance Commission would make a decent allocation to Kerala. "The current allocation is at the rock bottom, and the only way it can move is upward," he quipped.

Here are the sector-wise key highlights of the Budget:

Entrepreneurs & startups

• Loans up to Rs 10 crore at 5% interest for MSME/Startup entrepreneurs to establish coworking spaces, subject to conditions.

• Rs 10 crore provided to KFC for interest subvention component.

• Rs 1 crore earmarked for AI startup ventures.

• Rs 10 crore designated for the fintech sector.

• Rs 5 crore for New Innings, a project supporting elderly people to start businesses.

• Rs 5 crore allocated for establishing toy manufacturing units as MSMEs, with Kudumbashree support.

• Rs 10 crore for the Startup Mission.

• Rs 293.22 crore for establishing an IT park in Kannur.

• Rs 25.81 crore for Kerala Digital University operations.

• Rs 21 crore for Thiruvananthapuram Technopark, Rs 21.6 crore for Kochi Infopark, and Rs 11.5 crore for Kozhikode IT Park.

• Rs 500 crore allocated for implementing Nava Kerala projects.

Travel, tourism & infrastructure

• Metropolitan development plan for Kochi, Kozhikode, and Thiruvananthapuram.

• Kochi Metro upgrade to progress as planned; Thiruvananthapuram Metro Rail project work to commence this year.

• Rs 6,965 crore allocated to KSRTC.

• Rs 107 crore for purchasing BS6 buses for KSRTC.

• Rs 1,160 crore allocated for the LIFE Mission project to tackle the housing crisis.

• Campaigns to promote health tourism abroad, with Rs 50 crore allocated.

• Development of Kovalam-Bekal Inland Water Transport Corridor with Rs 500 crore from KIFFB.

• Rs 25.22 crore for purchasing new energy-efficient boats.

• Vizhinjam to be developed as a major industrial corridor.

• Third and fourth phases of Vizhinjam port slated for completion by December 2028.

• Rs 20 crore allocated for the seaplane project.

• Rs 10 crore for the Operation Breakthrough project to prevent waterlogging in Kochi.

• Rs 10 crore earmarked for addressing waterlogging issues in Ernakulam.

• Rs 500 crore allocated for inland navigation development.

• Development of Kochi-Bangalore corridor with Rs 200 crore.

• Rs 50 crore for the Petrochemical Park in Kochi.

• Rs 20 crore for the Banasura Sagar project in Wayanad.

• Rs 77 crore for soil conservation efforts.

• Rs 73 crore allocated for coconut development.

• Rs 120 crore for dairy development.

• Rs 78.4 crore for vegetable cultivation.

• Rs 150 crore for paddy cultivation.

• Rs 5 crore for the Vaikom Smaraka Kendram.

• Rs 7 crore for Kochi Muziris Biennale.

• Rs 5 crore for the MT Memorial at Thunchan Parambu, Malappuram.

Employment sector

• Job appointments: 43,152 appointments through employment exchange; 8,293 regular and 34,859 temporary.

• Welfare assistance: Rs 2,764.37 crore disbursed to labourers and families through welfare boards.

• Sector outlay: Rs 538.44 crore allocated, Rs 50 crore more than the previous year.

• Income support: Rs 100 crore for providing Rs 1,250 to workers in beedi, khadi, fisheries, and coir sectors.

• ITI modernisation: Rs 25 crore allocated.

• Noon meal scheme: Rs 15 crore for protein-rich meals for ITI trainees, Rs 6 crore higher than last year.

• Self-employment: Rs 17 crore for the SARANYA scheme.

• NORKA action plans: Rs 150.81 crore, including Rs 77.50 crore for jobless expatriate Keralites and Rs 25 crore for NDPREM activities.

• NRK welfare: Rs 23 crore for assistance to members of the NRK Welfare Fund Board.

Rehabilitation & relief measures

• Rs 750 crore allocated for the rehabilitation of Wayanad landslide victims.

• State requires Rs 2,221 crore for complete restoration.

• Relief measures for pensioners, with DA arrears to be disbursed in two installments.

• Rs 600 crore allocated for service pensioners in February.

Education

• Fifty research projects to be assigned to higher education institutions to enhance research and development efforts.

• Rs 30 crore for the Vidya Vahini Project, improving digital education.

• Rs 10 crore for barrier-free schools.

• Rs 2 crore allocated for installing napkin vending machines in schools.

• Rs 402 crore set aside for the noon meals program in schools.

• Rs 47 crore for Kerala Agricultural University.

• Rs 30 crore earmarked for Sreenarayana Open University.

Health Sector

• Overall allocation: Rs 2,915.49 crore for Medical and Public Health, up by Rs 97.96 crore from last year.

• Pain & palliative care: Rs 5.4 crore, including Rs 1 crore for a palliative care grid.

• Communicable diseases: Rs 12 crore for prevention activities.

• Women & children hospitals: Rs 8 crore for infertility clinics and modern labs.

• Ambulance services: Rs 80 crore for operating 335 advanced life support ‘108’ ambulances.

• Cath labs: Rs 3 crore for phased establishment in major hospitals.

• Dialysis units: Rs 13.98 crore to run 105 units; all district/general hospitals to get facilities.

• National Health Mission (NHM): Rs 465.20 crore as State share.

• PM-ABHIM: Rs 25 crore as State share.

• e-health programme: Rs 27.60 crore allocation.

• Rs 21 crore allocated for setting up stroke units in all district hospitals.

• Rs 15 crore for the National Nutrition Mission.