Kerala’s Debt Soars to ₹4.8 Lakh Crore in 2025: Year-by-Year Borrowing Details and Central Grants submitted at Lok Sabha

Kerala’s debt burden has reached an all-time high of nearly ₹4.82 lakh crore, according to data placed before the Lok Sabha on Monday by the Ministry of Finance. The figures, provided in response to a question on the state’s financial crisis, reveal a steady and significant rise in Kerala’s borrowings over the past decade, sparking renewed debate about fiscal sustainability in the southern state.

Year-wise data submitted by the Ministry shows Kerala’s total outstanding liabilities stood at ₹1,62,272 crore in 2015-16 and have since nearly tripled, with projections reaching ₹4,81,997 crore by March 31, 2026. The state’s annual market borrowings have also witnessed a sharp surge, rising from ₹15,000 crore in 2015-16 to ₹53,666 crore in 2024-25. Notably, the financial year 2023-24 alone saw record borrowings of ₹42,438 crore, underscoring the mounting pressure on Kerala’s finances.

Responding to questions about the reasons behind the financial crisis, the Ministry clarified that fiscal performance of states—including Kerala—is monitored by their respective legislatures and guided by laws such as the Kerala Fiscal Responsibility Act, 2003. The act places the onus of prudent fiscal management on the state government, mandating the progressive elimination of revenue deficits and sustainable debt management within a transparent, medium-term fiscal framework.

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While the Centre applies a common set of fiscal limits for all states, it also provides substantial financial support to Kerala through various channels. Data for the period 2021-22 to 2025-26 (up to July 2025) shows the state received over ₹1.16 lakh crore in central grants and assistance. This includes ₹47,889 crore in Finance Commission-recommended grants, ₹27,386 crore under centrally sponsored schemes, ₹26,886 crore for central sector schemes, and ₹5,514 crore as special assistance for capital investment.

The Ministry pointed out that factors such as growing fiscal deficits, increased reliance on market borrowings, and constraints on borrowing capacity have contributed to Kerala’s current financial challenges.

At the same time, the central government has reiterated its commitment to providing targeted assistance, supporting Kerala’s efforts to manage its finances while adhering to nationally accepted fiscal norms.

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