Union Budget 2026 leaves poll-bound Kerala underwhelmed; rare earth corridor, turtle trail only takeaways

For a state heading into Assembly elections, Kerala found little to cheer in the Union Budget presented by Finance Minister Nirmala Sitharaman on Sunday. Despite Kerala sending a BJP MP to the Lok Sabha in the 2024 general elections and recently electing the BJP-led NDA to rule a major corporation, the budget offered few tangible announcements for the state, leaving many disappointed.

Kerala’s name figured only twice in the Finance Minister’s budget speech, even as several long-pending demands of the state found no mention. Key proposals such as an All India Institute of Medical Sciences (AIIMS) and a high-speed rail corridor, both repeatedly raised by the state government, were absent from the budget.

One reference to Kerala came in the announcement of Rare Earth Corridors, where the Centre proposed to support mineral-rich states, including Odisha, Kerala, Andhra Pradesh and Tamil Nadu, to promote mining, processing, research and manufacturing of rare earth permanent magnets. The scheme for rare earth magnets was launched back in November 2025.

The second mention was in the tourism sector. Sitharaman announced plans to develop ecologically sustainable tourism trails, including turtle trails along key nesting sites in the coastal areas of Odisha, Karnataka and Kerala. The proposal also included mountain trails in Himachal Pradesh, Uttarakhand and Jammu and Kashmir, and bird-watching trails around Pulikat Lake in Andhra Pradesh and Tamil Nadu.

While the budget included proposals relevant to Kerala’s agrarian economy, these were part of broader national schemes. The Finance Minister announced support for high-value crops such as coconut, sandalwood, cocoa and cashew in coastal areas to diversify farm output, boost productivity, enhance farmers’ incomes, and create new employment opportunities.

Highlighting India’s position as the world’s largest coconut producer, Sitharaman said around 30 million people, including nearly 10 million farmers, depend on coconut cultivation for their livelihood. She announced a Coconut Promotion Scheme to increase production and productivity by replacing old, nonproductive trees with new saplings and improved varieties in major coconut-growing states, a move that could significantly benefit Kerala.

However, the budget offered no Kerala-specific commitments in sectors such as higher education, healthcare, or infrastructure. Although Sitharaman proposed establishing three new All India Institutes of Ayurveda, she did not specify the states in which they would be located. Similarly, the announcement of a National Institute of Hospitality, to be created by upgrading the National Council for Hotel Management and Catering Technology, came without clarity on its location.

The Budget also proposed a pilot scheme to upskill 10,000 tourist guides across 20 iconic destinations through a 12-week hybrid training programme in collaboration with an Indian Institute of Management. Kerala, with its strong tourism base, is expected to benefit from the initiative, though it was not explicitly named. The FM also proposed to launch a Scheme to support States in establishing five Regional Medical Hubs, in partnership with the private sector.

In comparison, another poll-bound Tamil Nadu was mentioned twice in the speech, in the context of the rare earth corridor and bird-watching trails, while Andhra Pradesh also received two mentions. For Kerala, the limited attention in the Union Budget has fuelled criticism that the poll-bound state did not receive its due, despite recent electoral signals and its strategic importance in sectors such as agriculture, tourism, and mineral resources.