LDF govt handed down liabilities worth ₹49,000 crore, says UDF's white paper
Kerala's new government inherited ₹48,733 crore in liabilities, including employee arrears and pending payments. The state's treasury position has worsened significantly, exacerbated by the end of central government financial support.
Kerala's new government inherited ₹48,733 crore in liabilities, including employee arrears and pending payments. The state's treasury position has worsened significantly, exacerbated by the end of central government financial support.
Kerala's new government inherited ₹48,733 crore in liabilities, including employee arrears and pending payments. The state's treasury position has worsened significantly, exacerbated by the end of central government financial support.
Thiruvananthapuram: The white paper on Kerala's fiscal health, tabled in the Legislative Assembly on Thursday, states that the newly elected UDF government inherited accumulated liabilities of ₹48,733 crore from the previous LDF administration.
According to the paper, the pending obligations include ₹21,670 crore in Dearness Allowance (DA) arrears owed to government employees and ₹14,387 crore in Dearness Relief (DR) arrears due to pensioners. Payments pending to banks and contractors under bill discounting arrangements amount to another ₹3,431 crore. Together with other deferred payments, the total outstanding liabilities exceed ₹48,700 crore.
"This is almost as large as Kerala's net annual borrowing," the paper notes, apart from highlighting a steady deterioration in the state's treasury position over the past decade. Kerala's cash buffer declined from ₹1,950 crore in 2016-17 and slipped into negative territory by 2019-20, indicating a widening gap between the growth of committed expenditure and revenue receipts even before the COVID-19 pandemic.
According to the white paper, prepared by a special committee headed by former Cabinet Secretary Dr K M Chandrasekhar, the temporary improvement witnessed between 2020-21 and 2022-23 was largely driven by extraordinary financial support from the Centre rather than any structural improvement in the state's finances.
During this period, Kerala received a cumulative ₹77,201 crore from the Union government, comprising ₹48,388 crore in Revenue Deficit Grants and ₹28,813 crore as GST compensation grants. The state also raised ₹86,405 crore through open market borrowings during the same period.
The paper says the treasury situation worsened sharply after the GST compensation regime ended in June 2022 and Revenue Deficit Grants were discontinued.
Describing 2024-25 as particularly alarming, the white paper states that the treasury recorded negative balances in 10 of the 12 months, forcing the government to depend heavily on the Reserve Bank of India's liquidity support mechanisms for most of the year.
It also notes that the treasury managed to close the year with a positive balance of ₹2,076 crore only because of a large concentration of open market borrowings in March, when the state raised ₹12,744 crore, accounting for nearly 24 per cent of its total borrowings for the year.