The newly elected United Democratic Front (UDF) government on Thursday tabled a White Paper on Kerala’s finances in the state Assembly, revealing mounting public debt, rising liabilities and persistent treasury stress that together paint a worrying picture of the state’s fiscal health.
According to the report, Kerala’s total public debt has surged to Rs 5.07 lakh crore, while pending liabilities stand at Rs 48,733 crore, including unpaid dearness allowance (DA) and dearness relief (DR) arrears owed to government employees and pensioners.
The White Paper said that nearly 77% of the state’s revenue is currently being consumed by committed expenditure such as salaries, pensions and interest payments, leaving limited room for developmental spending.
Capital expenditure among lowest in India
The report highlighted concerns over Kerala’s development spending, noting that capital expenditure remains among the lowest in the country despite the state recording one of the highest fiscal deficits.
According to the document, Kerala’s capital expenditure stands at just 1.3% of its Gross State Domestic Product (GSDP), raising concerns over long-term infrastructure creation and economic expansion.
The report also flagged severe treasury stress, revealing that the state depended on Ways and Means Advances for 262 days in 2025 and remained in overdraft for 84 days during the year.
The Financial #WhitePaper has been tabled in the Assembly. This is not a political document, but a fact-based assessment of Kerala’s fiscal position inherited by the new government. The State's outstanding liabilities have reached ₹5.07 lakh crore, accounting for 35.5% of… pic.twitter.com/vgVg2dXp1Y
— V D Satheesan (@vdsatheesan) June 4, 2026
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CM VD Satheesan calls White Paper a ‘roadmap for Kerala’s future’
Chief Minister VD Satheesan defended the document in the Assembly, saying the public had a right to know the true condition of Kerala’s finances.
“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,” Satheesan said.
He added that while the Finance Department prepared the document, the government had also sought expert guidance from three specialists to ensure an objective assessment.
“This is not a political White Paper. This document is intended to serve as a basic roadmap for building the future of Kerala,” the Chief Minister said.
KIIFB loans and PSU losses add to concerns
The report further pointed to rising liabilities linked to the Kerala Infrastructure Investment Fund Board (KIIFB), which currently has outstanding loans of nearly Rs 21,000 crore.
The White Paper argued that these borrowings should effectively be treated as liabilities of the state government, adding to Kerala’s overall debt burden.
Another major concern flagged in the report was the deteriorating financial condition of state-owned public sector enterprises.
According to the findings, cumulative losses of Kerala’s public sector undertakings have climbed to Rs 78,851 crore, with entities such as Kerala State Road Transport Corporation (KSRTC) and the Kerala Water Authority accounting for a major share of the losses.
Welfare allocations and revenues under pressure
The report also stated that allocations for welfare schemes benefiting Scheduled Castes, Scheduled Tribes, backward communities and minorities had declined in recent years.
At the same time, lower-than-expected state tax collections and reduced financial assistance from the Centre have added to Kerala’s fiscal pressure, according to the document.
The government noted that without stronger revenue growth and tighter expenditure management, sustaining welfare commitments and developmental projects could become increasingly difficult.
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Pinarayi Vijayan attacks White Paper
Leader of Opposition and former Chief Minister Pinarayi Vijayan criticised the manner in which the White Paper was prepared and tabled in the Assembly.
“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,” Vijayan said.
He argued that the issue was not about consulting experts but about ensuring that the White Paper was prepared through the proper institutional process.
Private investment, fiscal discipline seen as key solutions
Despite the grim financial assessment, the report stated that Kerala’s economic challenges could still be addressed through sustained policy measures focused on attracting private investment, promoting industrial growth, creating jobs and expanding infrastructure.
The White Paper stressed that long-term economic development would require stronger fiscal discipline, greater transparency and sustainable financial management practices.
The report added that balancing welfare commitments with fiscal sustainability would remain one of the biggest challenges for the Kerala government in the coming years.
TOPICSKeralaKeralamUDFVD SatheesanThis article was first uploaded on June four, twenty twenty-six, at fifty-three minutes past twelve in the night. © IE Online Media Services (P) Ltd