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Kerala’s outstanding liabilities are reported to be one of the highest in the country in terms of gross state domestic product or GSDP.
THIRUVANANTHAPURAM Close to 50 per cent of Kerala’s bond liabilities are maturing within five years, according to official statistics on states revealed by the Reserve Bank of India (RBI).
While close to 8 per cent of the debt raised through the issue of state development loans (SDLs) or bonds will mature within one year from March 2023, close to 41 per cent of these bond liabilities need to be paid up within the next four years according to the RBI data.
On Kerala’s outstanding liabilities, while 60.3 per cent are made of SDLs, the second in that order is contributed by loan from provident fund (PF) followed by loan from Central Government at 5.4 per cent as per the break-up details published by the central bank.
Kerala’s outstanding liabilities are reported to be one of the highest in the country in terms of gross state domestic product or GSDP. As per the figures gathered up to 2023-24 (budget estimates), the state’s total liabilities have grown to Rs4,29,270.6 crore .
This represents a growth of 76 per cent compared with Rs2,43,745.7 crore outstanding liability the state had five years ago, and 242 per cent in comparison with Rs1,25,678 crore that the state had ten years ago.
High debt-GDP ratio
Kerala’s liabilities in terms of its GSDP has soared to as high as 36.5 per cent as estimated by the 2023-24 budget. This is way above 29 per cent that has been prescribed as the ceiling by the Fiscal Responsibility and Budget Management (FRBM) Act of 2003.
“The debt-GSDP ratio of Kerala has always been above 29 per cent right from 2017 onwards, and after 2020-21 (FY21), it has always remained above 34 per cent,” said Prof Mary George, a leading economist, who has studied thoroughly on Kerala economy.
The combined debt-GDP ratio of States peaked at 31 per cent at end-March 2021 and declined to 27.5 per cent by end-March 2023, supported by fiscal consolidation.
At a disaggregated level, the debt to GDP ratio could exceed 25 per cent as at end-March 2024 (as per budget estimates) of 25 States/ union territories (UTs).
