The recently released White Paper on Keralam’s finances indicates a serious financial predicament for the state, as presented in the legislative assembly on June 4. The United Democratic Front (UDF) government is said to have inherited significant fiscal challenges, marked by increasing public debt and liabilities. The document reveals that Keralam’s public debt has escalated to Rs 5.07 lakh crore.

A striking 77 per cent of the state’s revenue is reportedly allocated for unavoidable expenditures, including salaries, pensions, and interest payments. This leaves little room for funds to be directed towards developmental initiatives, exacerbating the overall fiscal strain.

In terms of capital expenditure, the report highlights that Keralam’s investment in development is alarmingly low—standing at only 1.3 per cent of the Gross State Domestic Product (GSDP). This low ratio occurs despite the state experiencing one of the highest fiscal deficits in the country, indicating a stark imbalance in financial management.

Challenges in Treasury Management

The report elaborates on the treasury crisis affecting the state, revealing that Keralam depended on Ways and Means Advances for an extended period of 262 days in 2025. Furthermore, the state was reportedly in overdraft for 84 days within the same year, highlighting acute liquidity issues.

Chief Minister VD Satheesan has stated that the new government also faces pending liabilities amounting to Rs 48,733 crore. This figure encompasses arrears related to dearness allowance and dearness relief owed to government employees and pensioners, further straining the state’s financial resources.

<h4″Satheesan asserted the need for transparency regarding Keralam’s financial health, emphasising that the document is devoid of confidential information and reflects a commitment to disclose the state’s economic condition. The White Paper was developed with inputs from three experts, although it was compiled by the Finance Department, with the intent to offer a clearer understanding of Keralam’s fiscal reality.”

Political Reactions and Criticism

The Leader of the Opposition and former Chief Minister Pinaryi Vijayan has raised concerns regarding the presentation of the White Paper, claiming that the government neglected established protocols. Vijayan questioned the Chief Minister’s assertion that this document is the only non-political White Paper, suggesting that it might also possess political overtones.

He pointed out that the credibility of the document is undermined if proper institutional mechanisms were not followed in its preparation. Allegations have surfaced regarding the treatment of outstanding loans from the Keralam Infrastructure Investment Fund Board (KIIFB), which total approximately Rs 21,000 crore, and the potential impact on the state’s liabilities.

The cumulative losses of public sector enterprises in Keralam have reached Rs 78,851 crore, largely attributable to significant losses from entities such as the Keralam State Road Transport Corporation (KSRTC) and the Keralam Water Authority. This situation raises questions about the viability of public sector financial management and its implications for state resources.

In spite of these challenges, the White Paper underscores the potential for addressing Keralam’s financial difficulties through attracting private investment, fostering industrial growth, generating employment, and expanding infrastructure development. It calls for a focus on fiscal discipline, transparency, and sustainable financial management to achieve long-term development goals.

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