White Paper puts Kerala’s liabilities at ₹5.07-lakh crore, CM says fiscal structure under ‘serious’ strain

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Kerala Chief Minister V.D. Satheesan | Photo Credit: H. VIBHU

Painting a bleak picture of State finances, a White Paper tabled in the Kerala Legislative Assembly on Thursday by Chief Minister V.D. Satheesan observed that “behind Kerala’s social achievements lies a fiscal structure that is under serious and growing strain.”

On the fiscal front, Kerala currently faces a “large burden” of outstanding liabilities (₹5.07 lakh crore), committed expenditures (77.6% of Total Revenue Receipts (TRR)), and interest payments (20.9% of TRR), the document, ‘Kerala’s Fiscal Health: A Status Report,’ a 195-page document drafted by a committee headed by former Union Cabinet Secretary K.M. Chandrasekhar, noted.

Citing the findings of the panel, Mr. Satheesan, who also handles the finance portfolio, said Kerala faces a shortfall of approximately ₹20,500 crore in Central transfers in 2026-27 due to “wild” guesswork made by the previous Left Democratic Front (LDF) government in the Budget estimates. “The fiscal situation is very vulnerable. Outstanding liabilities amount to 35.5% of the Gross State Domestic Product (GSDP),” the Chief Minister said.

Committed expenditure — salaries and wages, pensions, and interest payments — consumed 77.6% of the revenue receipts in 2025-26, against an all-States average of 46.4%, according to the White Paper. “For every ₹100 Kerala receives in revenue, ₹77 is already committed, leaving only ₹23 for schools, hospitals, roads, welfare, capital investment, and support to local governments,” it said.

Several recommendations in the White Paper entail major departures from existing government policy. Among other things, it recommends the creation of favourable conditions for “heavy private sector investment,” given the acute shortage of resources at the State level. The policy shifts are especially evident in the case of the Kerala Infrastructure Investment Fund Board (KIIFB), loss-making public sector enterprises (PSE) and the State’s power sector where it has advis