‘State secrets leaked’, allege CPI(M) leaders after CM Satheesan tables report on Kerala’s fiscal health

The latest status report on Kerala's fiscal health might have been the UDF government's way of transparency, but it has triggered uproar from the opposition side, the LDF. After Chief Minister V.D. Satheesan, who also holds the finance minister's portfolio, tabled the white paper in the Kerala Legislative Assembly, former finance minister and CPI(M) veteran K.N. Balagopal expressed his dissent.

Balagopal's position is that the newly elected state government allegedly handed over official state secrets to outsiders. The preface of the white paper, written by CM Satheesan, reads as follows:

"I place on record my sincere appreciation to the distinguished Committee that prepared this report. K. M. Chandrasekhar, IAS (Retd.), former Cabinet Secretary to the Government of India, provided exemplary leadership as Chairman and brought to this exercise his vast experience in public administration and governance. Prof. D. Narayana, former Director of the Gulati Institute of Finance and Taxation (GIFT), and Prof. C. Veeramani, Director of the Centre for Development Studies (CDS), contributed their deep expertise and scholarship on Kerala's economy. Prof. M. Parameswaran of CDS and Dr Kiran Kumar Kakarlapudi of GIFT provided valuable research and analytical support in the preparation of the report."

The Centre for Development Studies (CDS) in Thiruvananthapuram is a research institution under the Planning and Economic Affairs Department, Government of Kerala. GIFT, as in Thiruvananthapuram, is the upgraded Centre for Taxation Studies (CTS), an autonomous institution formed by the Government of Kerala in 1992.

Allegation by opposition

Balagopal's allegation is that the right procedure was not followed. According to him, entrusting the preparation of the white paper to another committee instead of the state finance department itself, and handing over documents to them, was not the correct way.

However, the LDF leader also said he did not fear the release of the white paper, and that it was good for everyone to know the truth. But, he doubled down, stating that only the CAG has the authority to audit the finance department's records and that only a very few officials usually see confidential documents.

Handing over such documents to the committee was a breach of oath, Balagopal alleged, even hinting that leaking secrets could disrupt the government's functioning, according to Malayala Manorama's ground reporting.

VD responds

CM Satheesan, on the other hand, rubbished Balagopal's allegations, calling them baseless. He said that no documents had been leaked and that the white paper was released with the approval of the cabinet.

The public should know the true financial situation of Kerala, Satheesan said. A team of three experts evaluated the documents contained in the budget's plan documents. The finance department prepared the white paper after examining all these, he clarified.

The chief minister then said that it was not a political document but one that shatters fabricated perceptions. He also said that the white paper should become a foundational document for building the future of Kerala.

To this, Opposition Leader Pinarayi Vijayan said that the chief minister's explanation was like him trying to find obscure excuses.

What does the Kerala fiscal report say?

Kerala’s Fiscal Health: A Status Report explains how much money the state has, how much it owes, and what problems it faces.

At the risk of over-simplifying it, imagine Kerala earns ₹100. For each of this ₹100 in inflows, ₹77 is already reserved—for old bills it must pay (salaries, pensions, and loan interest). Now, the state only left with ₹23 to spend on everything else like food, books, and clothes. That's a simplified explanation of the current situation. In contrast, most other Indian states get to keep around ₹54 out of every ₹100 for actual spending.

Kerala's debt is massive

Kerala currently owes ₹5.07 lakh crore in total; that's 35.5 per cent of everything the state earns in a year. The national average is around 29 per cent.

Moreover, the state treasury ran negative for 10 out of 12 months in 2024–25. This means the government had to keep borrowing emergency money just to pay basic expenditure bills. In 2025, the state was in this emergency borrowing mode for 262 days and in a full overdraft (the most extreme situation) for 84 days.

The KIIFB problem

The government created a separate body called KIIFB to borrow money for building roads and infrastructure outside the normal budget. The idea was clever, but it seems to have backfired, if the whitepaper is any indication. KIIFB's loans cost 1 to 1.5 percentage points more in interest than if the government had borrowed directly, and all the debt ultimately falls back on Kerala anyway. KIIFB currently has an unmet loan liability of around ₹21,000 crore, with another ₹35,000 crore worth of projects still needing to be funded.

Also, a disproportionate chunk of KIIFB projects went to just three districts: Kannur (20 per cent), Thiruvananthapuram (17 per cent), and Ernakulam (11 per cent). These three absorbed nearly half the total funds, the report noted. "Neither human development indices nor economic need indices provide an obvious justification for this concentration," it read.

Government firms losing money

Kerala has 132 active government-owned companies covering buses, electricity, water, manufacturing, and more. Most of them are losing money, as per the report. Their total accumulated losses grew from ₹31,571 crore in 2021-22 to ₹78,851 crore in 2024-25. In 2024-25 alone, just three entities, KSRTC (buses), KSSPL (social security pensions), and KWA (water authority), accounted for 72 per cent of the total net loss. The government has to keep pumping money into them just to keep them running.

Inherited bills from Pinarayi govt

The new government also inherited a pile of unpaid bills worth ₹48,733 crore. This includes:

• ₹21,670 crore in unpaid salary raises (DA) owed to government employees
• ₹14,387 crore owed to pensioners as Dearness Relief
• ₹3,431 crore owed to banks and contractors under a bill discounting system, where the government had essentially taken short-term loans against pending bills

The brain drain problem

Over 22 lakh Keralites live and work abroad, and remittances from them make up 23.2 per cent of Kerala's Net State Domestic Product. This is money sent home by people who had to leave because there weren't enough jobs here.

Kerala educates its people brilliantly, the report suggested, but then can't employ them at home. The unemployment rate for educated women in Kerala is 20.7 per cent, nearly five times the national average of 4.5 per cent.

The whitepaper went on to note that Kerala still has excellent schools, low child mortality, and high literacy, and that these achievements must be protected. The report suggested the state needs to encourage private investment, reform or close loss-making government companies, improve tax collection, and stop borrowing just to pay current bills.

The whitepaper also recommended that development spending, which has been steadily cut and now falls below 18 per cent of total expenditure, must be protected, especially for marginalised communities like SC/ST, whose share of plan expenditure fell from 9.24 per cent in 2017-18 to just 3.85 per cent in 2025-26.