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The decision was taken by a cabinet meeting chaired by Chief Minister Pinarayi Vijayan, an official release said.
Gukesh has dethroned Arjun Erigaisi after the latter had a mighty slump with a series of poor performances in the Tata Steel Masters.
The FIDE statement also puts in a quandary the participation of India's D Gukesh and Viswanathan Anand in the high-profile event starting February 7.
Praggnanandhaa checkmated Arjun Erigaisi in a classical game in the Tata Steel Masters.
Fabiana Caruana played out a 24-move draw with Gukesh in round three of Tata Steel Masters.
Kerala women's team led by Sreekala R defeated Tamil Nadu in the final.
Kerala will play Telangana in the women's semifinals.
The Indian GM defeated Dutch GM Anish Giri in the opening round of Tata Steel Masters.
D Gukesh will compete in the Tata Steel Masters at Wijk aan Zee starting today.
The two-time Olympic medallist lost 9-21, 21-19, 17-21 to Indonesia's Gregoria Mariska Tunjung.
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