Thiruvananthapuram, May 21 (PTI) Kerala's total public debt is no longer following its three-decade trend of doubling every five years, state Finance Minister K N Balagopal said here on Wednesday.

He said in 2010–11, Kerala's total liabilities were Rs 78,673 crore.

"By 2015–16, they had doubled to Rs 1,57,370 crore, and reached Rs 2,96,901 crore in 2020–21. Based on this trend, the debt should have reached around Rs 6 lakh crore by 2025–26. Instead, it is now expected to be Rs 4.65 lakh crore -- well below earlier projections," the minister told reporters here.

Balagopal said the slower increase is mainly due to the central government not allowing Kerala to borrow its full eligible amount under federal rules.

"This limited the state’s ability to fund more development and welfare programmes," he said.

Balagopal also said that the state's debt burden is coming down and that borrowing is being done responsibly and within legal limits.

The minister said the state is borrowing only in proportion to the growth of its economy and strictly following rules set by the Fiscal Responsibility Act.

The law, approved by both Parliament and the State Assembly, allows states to borrow only with the Central government's permission and under Reserve Bank of India guidelines, he said.

"As per current rules, Kerala can borrow up to 3 per cent of its Gross State Domestic Product (GSDP) each year. However, the state borrowed only 2.5 per cent in 2022–23 and 2.99 per cent in 2023–24," Balagopal said.

He said the Centre had even denied the state permission to raise loans it was entitled to.

After strong demands last year, the Centre allowed more borrowing, but the state still stayed below the 3 per cent cap, Balagopal said.

The minister also said the debt-to-GSDP ratio, a key measure of a state's financial health, has improved steadily since 2020–21.

According to data from the State Economics and Statistics Department, the ratio fell from 38.47 per cent in 2020–21 to 36.31 per cent in 2021–22, 35.38 per cent in 2022–23, and 34.2 per cent in 2023–24. It is projected to drop further to 33.9 per cent in 2024–25, Balagopal said.

He said in 2020–21, the state's total liabilities were Rs 2.96 lakh crore, while the GSDP was Rs 7.79 lakh crore.

"By 2023–24, liabilities rose to Rs 3.91 lakh crore, but the GSDP also increased to Rs 11.46 lakh crore. In 2024–25, debt is expected to reach Rs 4.31 lakh crore, while the GSDP is forecast to grow to Rs 12.75 lakh crore," the minister said.

He said the ratio of debt to economic output is not rising, but falling, as the economy grows faster than debt.

Looking back, the minister said past Congress-led UDF governments were responsible for more unsustainable borrowing.

"Between 2001 and 2006 under UDF rule, GSDP grew 13.1 per cent a year, but debt rose faster at 14.3 per cent. From 2006 to 2011 under the LDF government, GSDP grew at 13.7 per cent while debt growth slowed to 11.4 per cent. But under the UDF again from 2011 to 2016, GSDP growth dropped to 11.6 per cent while debt rose sharply by 14.9 per cent," Balagopal alleged. PTI TGB TGB KH

Borrowing limits under Fiscal Responsibility Act constrain Kerala's debt growth, keeping debt-to-GSDP ratio declining and below cap. Kerala's moderated public debt growth stems from limits on state borrowing under federal rules and Central permissions; the state asserts borrowing has remained within legal limits and proportional to economic growth under the Fiscal Responsibility Act, producing a declining debt-to-GSDP ratio as GSDP rises faster than liabilities.