Presenting a grim picture of Kerala’s financial position, Chief Minister V.D. Satheesan on Thursday said the state was facing a severe fiscal challenge due to absolute mismanagement of public finances and warned that the new government would have to undertake major corrective measures to restore stability.
Tabling a White Paper on the financial status of the state in the Assembly, Satheesan later told the media that the document was not an investigation report but an attempt to place before the people the actual condition of Kerala’s finances.
"The fiscal health of the state should be known to all our people. They should know what our income is, what our expenditure is and what the way forward is," he said, adding that the presentation had become necessary ahead of the new government’s first budget.
Satheesan said the figures presented in the White Paper reflected the reality and that political slogans or "Left jargon" could not hide the financial situation anymore. “Figures are figures, and they explain everything,” he said. According to the document, the new government has inherited total pending obligations amounting to Rs 48,733 crore, as on March 31, 2026.
The liabilities include Rs 21,670 crore towards DA arrears of government employees and teachers, Rs 14,387 crore in arrears of pensioners, Rs 3,431 crore under the Bill Discounting System involving banks and contractors, and other pending commitments, including health scheme claims, Supplyco dues, KMSCL payments, scholarships, and local body instalments.
The White Paper has also highlighted an additional immediate liability of Rs 21,690 crore expected during 2026-27, over and above routine expenditure commitments such as salaries, pensions, interest payments and capital spending. Satheesan said the government’s responsibility was to act as a facilitator and ensure transparency since the money being spent belonged to the people.
"The job of the government is not to hide facts but to present them transparently," he said. The Chief Minister also pointed to treasury trends and borrowing patterns as indicators of financial stress. The data showed that open market borrowings increased significantly over the years, rising from Rs 15,000 crore in 2015-16 to Rs 48,788 crore in 2025-26.
The treasury balance, which remained comfortable in earlier years, witnessed growing pressure, with negative year-end balances reported in some years. The White Paper noted that the closing treasury balance fell sharply from Rs 6,322 crore in 2025-26 to Rs 2,212 crore by May 16, 2026, indicating an erosion of Rs 4,110 crore in six weeks.
Satheesan said outdated policies needed to be revisited and reworked to bring Kerala back on track. He said institutions and schemes, including the KIIFB, would undergo a detailed examination, and future steps would be decided based on the findings. "We will do what is required to come out of this wreck," Satheesan said, stressing that rebuilding financial credibility would be the priority of the new administration.