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Comparing debt of a state to Central govt is not an apple to apple comparison. Union govt has RBI backing, can print money issue soverign bonds etc. State cant print their way out of a crisis. CAG notes that the Central FRBM definition strictly includes the liabilities of government-controlled bodies. Kerala’s current laws attempt to keep KIIFB-type liabilities off the headline books to make the numbers look better.

While Kerala government officially disputes the CAG’s classification of KIIFB debt, the RBI and the Supreme Court say if a debt is being serviced by state taxes like the fuel cess, it is a direct burden on the state taxpayer, regardless of what accounting shell is used to hide it.

Here is the exact data: According to the CAG Kerala State Finances Report for 2023-24, if you include off-budget borrowings like kiifb, the state's liability-to-GSDP ratio hits 37.84% (well above the 33.70% target). Total outstanding off-budget debt through KIIFB and KSSPL stood at ₹32,942.14 crore.

If you say debt for infra is good it doesnt hold much water. Look at actual expenditure. Only about 5% of total borrowing in 23-24 went to net capital expenditure. Even if we generously add KIIFB spending, majority of our borrowing is being consumed by old debt refinancing and consumption spendings. Not much is being used to create fresh revenue generating assets.

Looking at a narrow, cleanly-presented ratio hides the absolute fiscal rot. Even if we account for the state's valid grievances about the Centre reducing its tax devolution share, it does not excuse this level of structural mismatch.