Recent Trends in Kerala State Finances

The state of Kerala is facing a fiscal crisis due to increase in the expenditure on salaries, interest and pensions. The fiscal crisis became acute at the end of 1990's and State Government had published a white paper in 2001. The Dimensions of the crisis are rising fiscal deficit and public debt. Due to fiscal crisis the government was forced to cut the plan expenditure which resulted in low rate of capital formation of the state. The fiscal crisis also affected the decentralized planning and has resulted in a decrease in grant in aid to the state. It is in this context this study is attempted. The Period of Study is from 1991-2010.

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