Thiruvananthapuram | Kerala's total outstanding liabilities have crossed Rs 5.07 lakh crore, while unpaid dues and deferred payments have piled up to nearly Rs 49,000 crore, according to a fiscal status report tabled in the Assembly by Chief Minister V D Satheesan on Thursday.
The report was prepared by a three-member committee headed by former Cabinet Secretary K M Chandrasekhar.
Soon after assuming office, the new UDF government announced that it would bring out a white paper on the state's fiscal health and constituted the Chandrasekhar-headed panel for the purpose.
The white paper, titled "Kerala's Fiscal Health, A Status Report" presents a stark assessment of the state's financial position, warning that rising debt, mounting liabilities and heavy committed expenditure have severely constrained Kerala's ability to invest in development and infrastructure.
According to the white paper, salaries, pensions and interest payments alone consume 77 per cent of the state's total revenue receipts, while interest payments account for 20.9 per cent. At the same time, Kerala's capital expenditure stands at just 1.3 per cent of Gross State Domestic Product (GSDP), among the lowest levels in the country.
The white paper finds that the state currently carries outstanding liabilities of Rs 5.07 lakh crore.
In addition, the new government has inherited accumulated payment arrears, including Rs 21,670 crore in Dearness Allowance arrears, Rs 14,387 crore in Dearness Relief arrears and Rs 3,431 crore owed through bill discounting arrangements. Together with other deferred payments, the total pending liabilities amount to at least Rs 48,733 crore.
Describing the situation as a serious fiscal challenge, the report notes that the value of pending payments is almost equal to Kerala's annual net borrowing.
The white paper also raises concerns over treasury operations, stating that the state increasingly depended on emergency borrowing facilities from the Reserve Bank of India (RBI) to meet daily cash requirements.
In 2025, Kerala remained under Ways and Means Advances for 262 days and operated under overdraft for 84 days.
A major section of the report examines the functioning of the Kerala Infrastructure Investment Fund Board (KIIFB), which was created to mobilise resources for infrastructure projects outside the conventional budget framework.
According to the white paper, KIIFB currently has loan liabilities of around Rs 21,000 crore that will ultimately have to be serviced by the state government. It also has projects worth around Rs 35,000 crore that are yet to be funded.
It also reveals findings of the Comptroller and Auditor General (C&AG) that KIIFB lacks an adequate independent revenue base and that its debt is effectively state debt. It says KIIFB's cost of borrowing is about one to 1.5 percentage points higher than direct government borrowing, raising questions about the financial advantages of the model.
"KIIFB was a bold institutional innovation and was an attempt to create a professionally managed, market-facing infrastructure financier that could bypass the fiscal constraints binding the state budget," according to the white paper.
However, it adds, "Its borrowings are now state borrowings. Its financing costs are consistently higher than government borrowing rates." According to the white paper, the issue is no longer whether KIIFB should continue in its present form, but how the state should manage the transition while honouring existing liabilities and preserving the institution's technical and organisational capacity.
Thiruvananthapuram | Loss-making PSEs have become a major burden on Kerala’s finances, with their accumulated losses rising sharply over the past few years, according to a white paper tabled in the State Assembly by Chief Minister V D Satheesan on Thursday.
The white paper, prepared by a three-member committee headed by former Cabinet Secretary K M Chandrasekhar, recommended restructuring state-owned enterprises and said the government should consider disinvestment, privatisation, or even closure of non-strategic and potentially non-viable entities, while protecting workers’ interests.
It said such reforms were necessary to reduce the burden on the exchequer and improve the financial health of the state.
The report noted that the accumulated losses of state-owned enterprises rose from Rs 42,930 crore in 2021–22 to Rs 72,851 crore in 2024–25, despite continued government support.
The report, titled Kerala’s Fiscal Health: A Status Report, said most government companies and statutory corporations recorded losses over the past decade, with public utilities emerging as the biggest loss-making sector.
According to the white paper, three major public utilities—the Kerala State Electricity Board Limited, the Kerala State Road Transport Corporation, and the Kerala Water Authority—accounted for the bulk of losses incurred by state enterprises.
KSRTC remained one of the biggest concerns, posting a loss of Rs 1,580 crore in 2024–25 and carrying a negative net worth of nearly Rs 19,821 crore.
The report said persistent losses had completely eroded the corporation’s net worth and continued to place a heavy burden on state finances.
KSEBL, meanwhile, had the highest negative net worth among state enterprises at Rs 35,149 crore in 2024–25.
The report said the utility’s heavy dependence on power purchases from outside the state, which are more expensive than internally generated electricity, was a major reason for its weak financial performance.
The white paper also noted that public enterprises generated only limited returns for the government through dividends and profits while continuing to depend heavily on budgetary support, grants, and subsidies.
It further pointed out that KSRTC, KWA, and KSEBL together accounted for around 69 per cent of total loan repayment arrears owed to the state government by public sector entities and related institutions.
