A White Paper on Kerala's finances tabled by the UDF government reveals a severe crisis. Public debt has reached Rs 5.07 lakh crore, with 77% of revenue consumed by committed expenses, crippling development and causing persistent treasury stress.
The White Paper on Keralam finances, tabled in the state's legislative assembly on Thursday, painted a grim picture of the state's fiscal health, stating that the new United Democratic Front (UDF) government inherited a severe financial crisis marked by mounting debt, rising liabilities and persistent treasury stress.
Grim Fiscal Reality Revealed
The major findings in the financial report revealed that Keralam's total public debt has reached Rs 5.07 lakh crore, while nearly 77 per cent of the state's revenue is being spent on committed expenditures such as salaries, pensions and interest payments, leaving limited fiscal space for developmental activities. The report noted that capital expenditure on development remains among the lowest in the country. It said Keralam's capital expenditure stands at just 1.3 per cent of its Gross State Domestic Product (GSDP), one of the lowest among Indian states, despite the state running one of the highest fiscal deficits.
It further highlighted the severity of the treasury crisis, stating that the state relied on Ways and Means Advances for 262 days in 2025 and remained in overdraft for 84 days during the year. Chief Minister VD Satheesan said his government has also inherited pending liabilities amounting to Rs 48,733 crore, including dearness allowance (DA) and dearness relief (DR) arrears payable to government employees and pensioners, the report said.
Political Spat Over White Paper
"The people of Keralam have a right to know the true state of the state's finances. The information contained in the document is already available in the public domain. There is no confidential or classified material included in it. The government sought the assistance of three experts while preparing the White Paper. However, it was the Finance Department that prepared the document. This government has decided to seek expert advice while dealing with important policy matters. In the past, several White Papers presented before the Assembly were essentially political documents. This is not a political White Paper. If the actual financial condition of the state is to be properly understood, expert guidance is necessary. That is precisely why expert opinion was sought. This document is intended to serve as a basic roadmap for building the future of Keralam," the Keralam CM said in the assembly.
LoP and former CM Pinaryi Vijayan alleged that the state had bypassed norms while presenting the White Paper. "The Chief Minister's claim that this is the only genuine White Paper and that previous White Papers were political documents is a strange argument. In fact, it is this document that appears to be a political document. The issue is not about consulting experts, but about ensuring that the White Paper is prepared through the proper institutional mechanism. That has not happened here," he said.
Mounting Liabilities and Sectoral Losses
The White Paper pointed out that the Keralam Infrastructure Investment Fund Board (KIIFB) has outstanding loan liabilities of around Rs 21,000 crore and argued that these borrowings should effectively be treated as liabilities of the state government. It further stated that the cumulative losses of Keralam's public sector enterprises have risen to Rs 78,851 crore. Public sector entities such as the Keralam State Road Transport Corporation (KSRTC) and the Keralam Water Authority account for a substantial share of these losses.
According to the report, allocations for welfare schemes benefiting Scheduled Castes, Scheduled Tribes, backward communities and minorities have witnessed a significant decline in recent years. Lower-than-expected state tax revenues and reduced Central assistance have also added to the fiscal pressure, it added.
The Proposed Way Forward
Despite highlighting the challenges, the report said that Keralam's financial difficulties can be addressed through sustained efforts to attract private investment, promote industrial growth, generate employment and expand infrastructure development. The report stressed that the state's long-term development objectives cannot be achieved without ensuring fiscal discipline, transparency and sustainable financial management. (ANI)
(Except for the headline, this story has not been edited by Asianet Newsable English staff and is published from a syndicated feed.)
