White Paper on Kerala's Finances Reveals Public Debt of Rs 5.07 Lakh Crore

The report revealed that Kerala's total public debt has reached Rs 5.07 lakh crore. It noted that 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.

According to the document, capital expenditure on development remains among the lowest in the country. Kerala's capital expenditure stands at just 1.3 per cent of its Gross State Domestic Product (GSDP), despite the state running one of the highest fiscal deficits among Indian states.

The report also highlighted the severity of the treasury crisis, stating that Kerala 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 the government had 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 people of Kerala 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 Chief Minister said in the Assembly.

He added that while the government sought assistance from three experts during the preparation of the White Paper, the document was prepared by the Finance Department.

"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. This document is intended to serve as a basic roadmap for building the future of Kerala," Satheesan said.

Leader of the Opposition and former Chief Minister Pinarayi Vijayan criticised the document, alleging that due procedures were not followed in its preparation.

"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," Vijayan said.

The White Paper pointed out that the Kerala 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 Kerala's public sector enterprises have risen to Rs 78,851 crore. Public sector entities such as the Kerala State Road Transport Corporation (KSRTC) and the Kerala 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.

Despite highlighting the challenges, the report said Kerala'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 goals cannot be achieved without ensuring fiscal discipline, transparency and sustainable financial management.