Kerala’s GDP and revenue rise, but fiscal health remains weak: Report

THIRUVANANTHAPURAM: Even as Kerala’s overall domestic production and revenue increase, the state’s fiscal health continues to remain weak, according to the latest economic review report presented in the Assembly ahead of the state budget.

Kerala's Gross Domestic Product (GDP) grew from Rs 6.45 lakh crore to Rs 6.80 lakh crore, marking a growth rate of 6.19%. The state is now among the top 10 states in the country in terms of GDP growth. Revenue collection also exceeded the national average. All these are positive signs for the state's economy.

However, key fiscal indicators such as fiscal deficit, revenue deficit, and inflation show that the state’s financial position is still fragile. Weaknesses in these areas can directly affect the public. A rising deficit can lead to higher debt and reduced welfare benefits, while inflation increases living costs.

The report notes that Kerala’s deficit is partly due to lower central assistance- 6.14% less than expected- and challenges in controlling expenditure. With stricter spending controls, the deficit may come down in the current financial year.

Kerala’s own revenue has seen strong growth, covering 61.4% of the state’s total expenditure. Production in core sectors such as agriculture and fisheries rose from 0.24% to 2.36% in 2024-25. Total fish production in 2024-25 was 9.28 lakh tonnes, with 2.81 lakh tonnes from inland fisheries and 6.47 lakh tonnes from marine fisheries. Kerala ranks third in the country for marine fish exports by volume and second by value.

Industrial and construction sector output also grew from 5.7% to 7.8%. The state government’s 'My Startup, Pride of the Nation' initiative launched 1.39 lakh new enterprises, attracting investments of Rs 8,421.6 crore and creating employment for 3 lakh people, boosting overall economic production.

• Inflation in Kerala: 9.05%
• National inflation: 1.54%
• Fiscal deficit: 3.86% (from 3.02%)
• Revenue deficit: 2.49% (from 1.6%)