Kerala CM Pinarayi Vijayan refutes 'debt trap' claims, citing strong economic growth, reduced debt-to-GSDP ratio, and revival of traditional industries under the LDF. He blamed the Centre for financial stress ahead of the assembly election.
Kerala Chief Minister Pinarayi Vijayan on Monday strongly dismissed the narrative that the state is in a "debt trap," asserting that under the LDF-led government, Kerala has achieved unprecedented economic growth over the last decade despite severe financial constraints, natural disasters, and alleged neglect by the Central government. The Left Democratic Front (LDF) is approaching the upcoming April 9 Assembly election with immense confidence, Vijayan said, adding that the party will seek a mandate for a third consecutive term to ensure that the foundational work they have laid for a 'New Kerala' reaches its completion.
"The party has decided that I will contest once again from the Dharmadom constituency," he said. "One thing I can say with confidence about Kerala is that no matter how severe the crisis, the state will continue to move forward without faltering. Over the past decade, even while facing major challenges like floods, pandemics, and financial constraints, we have been able to carry forward both development and welfare together. This has been possible due to clear direction in governance and consistent policy decisions," Vijayan said.
Refuting 'Debt Trap' with Economic Data
Addressing a press conference in Kollam district, Vijayan said Kerala was in a financially weak position during 2011-16. "It was from that situation that the LDF government began its work in 2016. The progress we see today is a continuation of that effort. The state's GSDP (Gross State Domestic Product) itself is proof rising from ₹3.24 lakh crore in 2010-11 to ₹14.27 lakh crore today. Such growth within a decade is not ordinary," he said.
He further clarified that public expenditure has also seen a significant rise from an average of ₹68,000 crore during the United Democratic Front (UDF) period to over ₹1.75 lakh crore now. Last year alone, ₹1.74 lakh crore was spent, and this year it is expected to reach ₹1.92 lakh crore. This is not mere spending, but a balanced investment in both development and welfare.
More importantly, Vijayan said that most of the borrowing is used for development-oriented investments that will generate future income. "The debt-to-GSDP ratio has come down from 38.47 per cent in 2021 to 33.44 per cent now, which reflects prudent financial management. Therefore, claims that Kerala is in a financial crisis are politically motivated and not based on facts," Chief Minister Vijayan said.
Kerala today has a strong economic foundation, robust revenue capacity, controlled debt, and the ability to withstand crises. This progress did not happen overnight. It is the result of the LDF's clear vision and the continuity of governance from 2016 to 2026, stated the Chief Minister
Allegations Against Central Government
Vijayan also hit out at the Central government, alleging that its policies have caused a revenue loss of nearly ₹2.5 lakh crore over the last five years. "If the state had received its rightful share from the Centre and had been allowed adequate borrowing, Kerala could have moved forward without any financial stress. That is what the experience of the past decade shows," he said.
Revival of Traditional Industries
Detailing the revival of traditional industries, the Chief Minister said that the LDF government rescued the cashew, coir, and handloom sectors from the brink of collapse. "Before 2016, Kerala's traditional industrial sector was facing a severe crisis. Factories were shutting down, and workers in sectors like coir, handloom, and cashew were not receiving fair wages or benefits. The previous UDF government failed to modernise these industries or find new markets for their products. However, over the past ten years, the LDF government has adopted policies that protect both traditional industries and workers. We prioritised modernisation and diversification of products.
Cashew Sector
After assuming office in 2016, steps were taken to reopen closed cashew factories. Following the formation of the Kerala Cashew Board, ₹334.31 crore was allocated to import 93,774 metric tonnes of raw cashew. Around ₹84 crore, including pending dues, was distributed as gratuity to 7,516 workers. "We also implemented a one-time settlement scheme to support indebted entrepreneurs and revive factories.
Handloom Sector
In the handloom sector, ₹691 crore was spent on the free school uniform scheme between 2016-17 and 2025-26. Additionally, ₹107.06 crore was provided as a rebate and income support was extended to 16,727 weavers. A Cotton Board was formed, and special allocations were made to revive Hantex". Hantex is the apex body of primary handloom weavers' co-operative societies in Kerala, which was established in 1961.
Coir, Khadi and Other Sectors
"In the coir sector, ₹1,243.65 crore was spent over the last decade. Measures like income support, price stabilisation funds, and fibre bank schemes strengthened the sector. We expanded exports to international markets, including the US and UK, through online platforms and ensured insurance coverage for workers," Vijayan said.
"In the Khadi sector, ₹266.25 crore was given as income support and ₹46.56 crore as incentives. Efforts were also made to expand exports. In bamboo and handicrafts, we strengthened the Bamboo Corporation and set up incubation centres and bamboo bazaars, improving both marketing and employment opportunities. These interventions have not only improved the livelihoods of workers but also strengthened Kerala's economic base," he said.
Election Battle: LDF vs Opposition
Highlighting the upcoming elections, the Chief Minister urged the people to rely on evidence rather than "baseless propaganda." "Ultimately, the question before the people in this election is whether to move forward based on evidence and facts, or to believe baseless propaganda. The people of Kerala have consistently supported us over the last ten years, and we expect that support to continue," he said
"We believe in the wisdom of the people. They know who stood by them during their darkest hours. They know who is working for the future of their children. We are ready for the battle, and we are confident that the people of Kerala will choose progress over communalism and stagnation," the chief minister said.
PM Modi's Counter-Allegations
On Sunday, Prime Minister Narendra Modi, during an election rally in Palakkad, highlighted the alleged debt crisis of Kerala. He accused both LDF and UDF of selfish politics that he said crippled the state's finances.
Addressing the March 29 rally in Palakkad, PM Modi pointed out that Kerala's debt has more than tripled in two years to over Rs 5 lakh crore. "The Kerala government is now burdened with a debt of over Rs 5 lakh crore. This debt has more than tripled in two years. The people of Kerala are asking, "What is the share of this money earned by the people?" The answer is the same. When the NDA government comes to power, this money will go into the pockets of our own people, and will be used for the development of the people of Keralam... For the last 10 years, no new industrial project has been started to provide employment to the people of the state," he said.
Dharmadam Constituency and Election Details
The press conference ended with a ruckus, with some journalists expressing their ire over Vijayan not taking their questions. Meanwhile, on April 9, the date when Kerala goes to the polls to elect legislators for its 140-seat Niyamasabha, Pinarayi Vijayan will seek a mandate from the Dharmadam constituency in Kannur for the third time.
He had previously contested thrice from Kuthuparamba, winning in the Assembly polls of 1970, 1977, and 1991.
Previously, he was elected from Payyannur in 1996. The United Democratic Front has fielded Youth Congress State general secretary VP Abdul Rasheed, and the BJP has fielded K Ranjith as their candidate in the Dharmadam constituency for the 2026 Assembly elections.
Dharmadam is one of the seven assembly segments that constitute the Kannur Lok Sabha constituency. The eleven assembly constituencies in Kannur comprise Thaliparamba, Irikkoor, Azhikode, Kannur, Dharmadam, Mattannur, Peravoor, Payyannur, Kalliassery, Thalassery and Kuthuparamba.
Counting of votes will be held in Kerala on May 4
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