Keralam Chief Minister V.D. Satheesan defends State government’s borrowings
Kerala Chief Minister V.D. Satheesan defended his government's recent borrowings, citing the loss of the Revenue Deficit Grant and reduced borrowing limits. He also criticized the previous administration's fiscal management and off-budget debt.
Why it matters
Fiscal policy and state-level debt management are critical to the economic stability and development of Indian states.
Defending the Keralam government’s borrowings in recent months, Chief Minister V.D. Satheesan has said that every government across the world resort to borrowings.
Addressing a press conference in Thiruvananthapuram on Wednesday (September 2, 2026), Mr. Satheesan said that the United Democratic Front (UDF) government faces the additional challenge of not getting the Revenue Deficit Grant, which was available till last year.
“Last year, the 15th Finance Commission had allocated a Revenue Deficit Grant of ₹55,000 crore to the State government. However, the 16th Finance Commission stopped this. The previous Finance Minister prepared the Budget by taking into account the money from this grant too. The tax devolution from the Union government was also expected to increase, but it has not. The Borrowing limit which was 3.5% of the Gross State Domestic Product (GSDP) has now been reduced to 3%,” he said.
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