Thiruvananthapuram | Kerala's economy showed robust growth in 2024-25, but rising public debt remains a key challenge, according to the Economic Review tabled in the state Assembly on Wednesday.

According to the review presented by Finance Minister K N Balagopal on the eve of the state budget, the state's Gross State Domestic Product (GSDP) grew by 6.19 per cent in real terms in 2024-25, up from 6.0 per cent the previous year.

At current prices, the economy expanded by nearly 10 per cent, supported by improvements across all major sectors.

Per-person income also rose, with per-capita GSDP climbing to Rs 1,90,149, higher than the national average.

The services sector continues to dominate the state's economy, while the primary and secondary sectors both recorded healthy growth rates, signalling broad-based economic activity.

However, Kerala's public debt position expanded sharply in 2024-25.

Total outstanding public debt reached Rs 3,10,015.86 crore, up from about Rs 2,64,000 crore the year before.

The overall debt-to-GSDP ratio rose to 24.83 per cent, compared with 23.60 per cent in 2023-24.

Most of this debt (about 96 per cent) was internal, carried through market borrowings and institutional loans.

Loans from the Union Government accounted for just over four per cent of the total.

A recent report by the Comptroller and Auditor General of India noted that 14 states have public debt ratios above 25 per cent.

Kerala's ratio, based on final figures for 2022-23, stood slightly below that threshold at 22.91 per cent.

The state also reported increases in liabilities tied to small savings and provident funds, and both gross and net debt retention remained positive, indicating continued borrowing and repayment activity.

On the fiscal side, Kerala's fiscal deficit widened to 3.86 per cent of GSDP in 2024-25, compared with 3.02 per cent in the previous year, and is projected to narrow to about 3.16 per cent in 2025-26.

The revenue deficit also increased, but officials expect it to improve next year.

Total revenue receipts were broadly flat, rising marginally to Rs 1,24,861 crore, while transfers from the Centre declined sharply.

Kerala's own tax and non-tax revenues both saw modest increases.

Meanwhile, total expenditure grew by nine per cent, reflecting higher spending on both revenue and capital accounts.

Inflation remained relatively high in the state, with the Consumer Price Index showing around 9 per cent inflation in Kerala as of September 2025-- notably above the national average.