Chief Minister and Finance Minister V D Satheesan presented a detailed 195-page White Paper titled “Kerala’s Fiscal Health: A Status Report,” compiled by an expert committee led by former Cabinet Secretary K M Chandrasekhar.
The extensive document portrays a concerning scenario of an economy facing intense “structural stress” and a severe financial crisis inherited from the prior LDF administration.
“The state has significantly diverged from the fundamental principle of ‘borrow to invest, growth will repay,’ thereby undermining its growth potential,” the report states.
It highlights that Kerala is currently burdened with outstanding liabilities totaling ₹5.07 lakh crore, committed expenditures representing 77% of Total Revenue Receipts (TRR), and interest payments that make up 20.9% of TRR.
‘Kerala’s capital expenditure, at a mere 1.3% of its Gross State Domestic Product
(GSDP), is among the lowest in India, all while managing one of the highest Fiscal Deficits’
| Fiscal Indicator | Period/Basis | Kerala’s Metric | National Average | Context / Units |
| Outstanding Liabilities | 2025-26 BE | 35.50% | 29.20% | Of GSDP (Kerala: ₹5.07 lakh crore) |
| Committed Expenditure | 2024-25 Actuals | 77.60% | 46.10% | Of revenue receipts (National Avg.: RE) |
| Development Expenditure | 2024-25 RE | 39.90% | 63.50% | Of aggregate disbursement |
| Capital Expenditure | 2025-26 BE | 1.30% | 3.20% | Of GSDP |
| Interest Payment | 2025-26 BE | 20.90% | 12.20% | Of revenue receipts |
(Source: Kerala’s Fiscal Health: A Status Report (White Paper tabled in the Kerala Assembly)
Despite its fiscal challenges, Kerala continues to excel in crucial social metrics, achieving remarkable literacy rates, gender equity, and low infant mortality.
The White Paper findings: A Deepening debt trap
- Staggering Public Debt: The state’s total public debt has surged to ₹5.07 lakh crore.
- Crushing Committed Expenditure: Almost 77% of the total revenue receipts are earmarked for mandatory expenses, including salaries, pensions, and interest payments, with interest alone consuming 20.09%. This minimalizes any scope for growth-driven investments.
- Abysmal Capital Expenditure: Capital investment is recorded at only 1.3% of the Gross State Domestic Product (GSDP), ranking it among the lowest in India, despite the state’s substantial fiscal deficit.
- The KIIFB Burden: The report strongly criticizes the Kerala Infrastructure Investment Fund Board (KIIFB), describing it as a “parallel fiscal authority.” It has imposed a ₹56,000 crore financial liability on the state, comprised of ₹21,000 crore for unmet loan responsibilities and ₹35,000 crore for upcoming projects. Additionally, it indicated significant political bias, asserting that over 20% of KIIFB funds are concentrated exclusively in Kannur—the CPI(M)’s stronghold.
- Inherited Payment Arrears: The present government has taken on ₹48,733 crore in unpaid liabilities, which include substantial Dearness Allowance (DA) and Dearness Relief (DR) dues owed to government employees and pensioners.
- LDF Hits Back: Allegations of Norm Violations and Exaggeration
The opposition expressed its outrage, raising procedural objections and lodging a dissent note against the presentation of the document.
Leader of the Opposition (LoP) and former Chief Minister Pinarayi Vijayan denounced the report as entirely unfounded and highly politicized.
“This is not a matter of expert consultation but ensuring that the White Paper is drafted through the appropriate institutional processes, which has not occurred here,” Vijayan contended.
Former Finance Minister and senior CPI(M) leader K N Balagopal argued that disclosing internal state accounts to private entities breaches the official oath of office and the Official Secrets Act.
Balagopal also highlighted glaring inconsistencies between Satheesan’s current report and his previous statements as LoP.
“When he was the Opposition Leader, he consistently asserted that Kerala’s debt was ₹6 lakh crore, with ₹1.25 lakh crore owed to government employees. However, his current report claims total borrowing is only ₹5 lakh crore, with DA arrears at ₹48,000 crore. These ongoing administrative activities are entirely manageable for a standard state administration.”
Commenting on the exchange, BJP State President Rajeev Chandrasekhar remarked that the document supports concerns regarding Kerala’s declining economic activity.
“The report clearly indicates that Keralam’s tax revenues have been consistently diminishing due to insufficient investment. There are no investors, and economic activity is lacking. Over the past two years, it has underperformed by 10% compared to targets,” he stated.
