Kerala's Financial Crisis: Centre Details Aid And Stance

New Delhi: As the Monsoon Session began on Monday, July 21, Lok Sabha MP N K Premachandran raised questions regarding Kerala‘s financial crisis and the Centre’s actions, measures, and proposals concerning it in the Parliament. Addressing the RSP MP’s unstarred question, Minister of State for Finance Pankaj Chaudhary tabled the answer in the Lok Sabha.

As Premachandran asked whether the Government proposes to resolve the grave financial crisis in Kerala and enquired about the action taken thereafter, the Centre responded that it sets financial rules for the states clearly.

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When states borrow money, the government usually checks before giving permission whether they follow the financial rules and adhere to the borrowing limits recommended by the Finance Commission, Minister said.

“Further, the Government of India is also providing substantial financial resources to State Governments including the Government of Kerala in the form of Finance Commission Recommended Grants, Central Sector Schemes, Centrally Sponsored Schemes, and Special Assistance to States for Capital Investment,” Chaudhary added.

Assistance provided to Kerala through various grants, and schemes from 2021-22 to 2025-26 (till 10.07.2025) (credit: Lok Sabha document)

Under these heads, Kerala has been given assistance of Rs 37,605 cr in 2021-22, Rs 34,796 cr in 2022-23, Rs 21,347 cr in 2023-24, Rs 19,149 cr in 2024-25 and Rs 4,015 cr till 10 July, 2025, Centre notified citing table of records.

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The government also attached the RBI report detailing year-wise borrowings and debt of Kerala during the last ten years and the current year. According to the data, the market borrowings for the current financial year (2025-26) stand at Rs 14,000 cr as of July 9, 2025, and the total debt has been tentatively projected at Rs 4,81,997 cr as of March 31, 2026.