The White Paper tabled in the State Assembly by Chief Minister V.D. Satheesan on Thursday noted that “behind Kerala’s social achievements lies a fiscal structure that is under serious and growing strain.”

The State currently faces a “large burden” of outstanding liabilities (₹5.07 lakh crore), committed expenditures (77% of total revenue receipts – TRR), and interest payments (20.9% of TRR), the document titled ‘Kerala’s Fiscal Health: A Status Report,’ noted.

The State’s capital expenditure at 1.3% of its Gross State Domestic Product (GSDP) is “one of the lowest” among Indian states despite running one of the highest Fiscal Deficits, it said.

“Kerala has been violating the basic tenet of ‘borrow to invest, growth will repay’ in a big way, weakening the growth generating capacity,” the White Paper said.

On KIIFB

Further, the fiscal stress has been compounded by “parallel governance structures” such as the Kerala Infrastructure Investment Fund Board (KIIFB), it said. These have drained part of the revenue flow on the one side and creating massive liabilities on the other side, it said.

Against a national average of 46.1%, Kerala’s committed expenditure burden is more than one-and-a-half times what comparable States carry, according to the document. This leaves “barely one rupee in four for everything else: schools, hospitals, roads, welfare programmes, an support to local governments,” it said.