Kerala Government Unveils Ambitious IT and Digital Innovation Push in 2026-27 State Budget
The Kerala state government has announced a comprehensive strategy to significantly boost information technology and digital innovation in its 2026-27 budget, positioning these sectors as central drivers for economic growth, employment generation, and inclusive development across the state. Emphasizing the transformative role of IT in benefiting all sectors of the economy, the budget has substantially enhanced the plan allocation for the IT sector to Rs 548.05 crore, marking a notable increase from Rs 517.27 crore in the previous fiscal year.
Expansion of 'Work Near Home' Project and IT Infrastructure
The budget outlines plans to extend the innovative 'work near home' project to at least 200 centers throughout the state in the upcoming year. Priority will be given to educational institutions and local government bodies, including colleges, polytechnics, ITIs, and other institutions willing to provide buildings for this initiative. A substantial allocation of Rs 150 crore has been earmarked specifically for this project, aiming to decentralize employment opportunities and promote regional development.
Kerala's established IT parks—Technopark, Infopark, and Cyberpark—have demonstrated remarkable growth over the past decade. The number of companies operating within these parks has surged to 1,162 in the 2024-25 period, while employment figures have crossed the impressive milestone of 1.55 lakh jobs. The state's startup ecosystem has also experienced a dramatic expansion, with the number of startups skyrocketing from 800 in 2017-18 to 6,477, accompanied by investments exceeding Rs 6,983 crore.
Significant Growth in IT Exports and Workspace Creation
Finance Minister K N Balagopal highlighted the state's substantial progress in IT exports during his budget speech to the assembly. IT exports from Kerala have grown remarkably from Rs 8,500 crore to Rs 26,252 crore, reflecting the sector's increasing contribution to the state's economy. Additionally, the government has successfully created 100 lakh square feet of new IT workspace to accommodate this expansion. The number of IT companies functioning in the state has nearly doubled in the last five years, increasing from 650 to 1,162.
Cyber Valley: A Global Hub for Emerging Technologies
A landmark announcement in the budget is the proposed development of Cyber Valley at Infopark Phase III in Kochi. This ambitious project is envisioned as a global hub for information technology, artificial intelligence, and other emerging technologies. The budget further underscores the state's strategic focus on future-ready sectors, including artificial intelligence, semiconductors, space technology, drones, graphene research, and creative technologies. These initiatives will be supported by new policies and mission-mode projects specifically designed to strengthen Kerala's digital economy and technological capabilities.
Youth-Focused Initiatives for Employment and Skill Development
The government has announced a series of youth-focused initiatives in the budget, placing strong emphasis on employment generation, skill development, and the revival of community-level cultural and sports activities across Kerala.
Connect to Work Scholarship Scheme
A major highlight is the allocation of Rs 400 crore for the Chief Minister's 'Connect to Work Scholarship Scheme'. This program is aimed at supporting educated youth to undergo training in various professions, serving as an incentive for young people to acquire employable skills. Approximately five lakh youth are expected to benefit from this initiative, with 68,731 individuals already registered. The scholarship for the first month has been disbursed, and the full Rs 400 crore has been earmarked for the program in the coming financial year.
Enhanced Support for Sports, Youth Affairs, and Entrepreneurship
The budget has increased the plan allocation for the sports and youth affairs department by an impressive 51.9%, bringing it to Rs 220.86 crore. A sum of Rs 70.52 crore has been set aside specifically for youth entrepreneurship development programs, including corporate acceleration and scale-up support. Additionally, Rs 91 crore has been allocated to expand skilling, employment, and entrepreneurship opportunities for tribal youth, ensuring inclusive development across all communities.
To further strengthen the startup ecosystem, Rs 99.52 crore has been allocated for the activities of the Kerala Startup Mission, providing crucial support for innovation and enterprise development.
Revival of Arts, Sports, and Cultural Activities
Recognizing the vital role of arts and sports in fostering inclusive and active communities, the budget introduces a new initiative to provide financial assistance to youth-led arts and sports clubs in both urban and rural areas. Many of these clubs have experienced a decline in activities in recent years. Registered clubs will receive a working grant of Rs 10,000 each to revive regular programs, competitions, and cultural events, with Rs 5 crore earmarked for this purpose.
The budget also provides Rs 6.5 crore for 'Keralotsavam', an annual program organized by the Kerala State Youth Welfare Board designed to identify and nurture young artistic and sporting talents across the state.
