The upcoming Kerala state budget is expected to address one of the most closely watched issues among government employees and pensioners—the long-pending pay revision.
More than 5.23 lakh state government employees and around 4.5 lakh pensioners are awaiting clarity on salary and pension revisions. The last pay revision was implemented in 2019, and a fresh revision was due in 2024 under Kerala’s five-year pay revision cycle. Although the state government constituted the 12th Pay Commission in February this year, the panel completed its tenure in May without submitting its recommendations.
The issue has gained significance amid concerns over employee earnings and the state’s financial commitments. Data indicates that a large section of Kerala’s government workforce falls in lower salary brackets than is commonly perceived. More than 50,000 employees are in pay stages that translate into monthly take-home salaries of Rs 50,000 or less, even after accounting for dearness allowance and house rent allowance.
The largest employee segment, comprising over 2.22 lakh workers, falls within the Rs 50,001-75,000 pay-stage bracket. Overall, nearly 94 per cent of government employees earn below Rs 1 lakh in pay-stage terms, while only a small fraction fall into higher salary categories.
At the same time, the government faces mounting fiscal challenges. Salary and pension payments together accounted for more than Rs 75,000 crore in 2025-26, with salaries alone crossing Rs 45,800 crore. The financial impact of the previous pay revision continues to weigh heavily on state finances, having significantly increased expenditure on both salaries and pensions.
The state is also carrying substantial dearness allowance arrears inherited from previous years. According to a recently released white paper, nearly 77 per cent of the state’s revenue is already committed to salaries, pensions and interest payments.
As the government prepares its budget, it faces the difficult task of balancing employee expectations with fiscal sustainability.
