The Kerala Assembly Election 2026 is just around the corner, with polling scheduled for April 9, 2026, which will decide the next leader of the state. The state, situated at the southwestern tip of the country, has traditionally witnessed power alternating between the CPM and the INC, with either of the two leading the government.

In 2016, the CPM broke a decades-long pattern by becoming the first party since 1977 to lead the state for two consecutive terms. This shift in the political landscape of the state was viewed as something that has never been witnessed. 

With all the major alliances- LDF, UDF, and NDA setting their sights on power and releasing their respective manifestos, the challenges in Kerala remain a key highlight of the upcoming election. Kerala, formerly known as Keralam, has a literacy rate of 96.2% and, in 2025, became the first Indian state to completely eradicate extreme poverty.

However, some long-standing issues for many Malayalis in the state remain unchanged. Concerns such as unemployment, debt trap and investor resistance continue to exist. These are some of the key challenges that need to be addressed in Kerala.

Key Challenges in Kerala 

Congress MP Shashi Tharoor wrote in his opinion piece for NDTV that Kerala is stuck in a debt trap. Despite the state recording good economic growth between 2016 and 2026, Kerala’s rising debt has remained a central concern. As per the Economic Review presented before the Kerala Assembly, the state witnessed a notable increase in its economy, which grew by 6.19% in 2024–25.

However, the state’s public debt has risen to ₹3.1 lakh crore as of 2026. The amount previously stood at around ₹2.64 lakh crore in 2025. The Economic Times reported that the state borrowed most of this debt from banks, financial institutions, and other sources within India.

With a slight improvement in the employment rate, Kerala has seen a reduction in overall unemployment levels. The rate fell from 7.2% in 2023–24 to 4.3% in 2025. However, The Daily Hunt reported that unemployment among Malayali youth remains a major concern for the state. Despite Kerala’s high literacy rate, many people aged 15–29 are unemployed.

About 47.1% of women in Kerala face unemployment, compared to around 19% of men. Rural areas also struggle with job scarcity, even though the state has a large, educated young population.

The state also faces a rising rate of emigration compared to other states. According to a report by the International Labour Organization, Kerala has the highest emigration rate. The situation has reached a point where many residents claim that the state is highly dependent on workers from neighbouring states such as Bihar, Jharkhand, and Odisha etc.

Another issue is Kerala’s questionable reputation when it comes to attracting investors. According to the Ease of Doing Business rankings released by the central government, the state ranks relatively low and is often perceived as not being business-friendly. In 2021, Kerala-based Kitex Garments invested ₹1,000 crore in Telangana instead of Kerala. The company stated that it withdrew its investment plans in Kerala due to difficulties faced with state officials.

However, the state has been consistently trying to shed its negative image among investors to create better opportunities. These challenges could become a turning point for improvement, especially with the state assembly elections ahead, as they highlight areas that need urgent attention for a better future.

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