Thiruvananthapuram: The Pinarayi Vijayan-led Kerala government is set to take a further loan of ₹1,850 crore on December 23 to combat a severe liquidity crunch. With this latest move, the state’s total borrowing for the current financial year has surged to a staggering ₹34,350 crore, raising alarms over the state’s fiscal health.
Running Out of Room
Finance Minister K.N. Balagopal announced the decision as the state rapidly approaches its borrowing limit set by the Central Government. Financial experts warn that Kerala has only about ₹6,500 crore left in its borrowing capacity for the remaining three months of the fiscal year. Given the mounting daily expenses, this remaining buffer is considered woefully inadequate.
Salary and Pension Uncertainty
The primary concern remains whether the government can sustain the timely payment of salaries for state employees and pensions for retirees. Critics point to “financial mismanagement” and “excessive administrative spending” as the core reasons for the treasury being nearly empty.
Despite the looming crisis, the government has faced public backlash for failing to implement austerity measures or identify alternative revenue streams. As the state teeters on the edge of a debt trap, the upcoming months will be a critical test for Minister K.N. Balagopal’s economic strategy.
