Chief Minister Pinarayi Vijayan himself has stated that Kerala is in a serious economic crisis. The Chief Minister alleges that the unconstitutional and illegal measures taken by the central government against Kerala are what put the state in a financial crisis. He pointed out that Kerala approached the Supreme Court to restore constitutional rights and improve the economic situation.

For many years, Kerala has been functioning by borrowing money when it is in financial distress. However, Kerala started facing a severe financial crisis when the Centre cut the borrowing limit of Kerala by treating the loans taken by KIIFB and the pension company as the state's debt. Kerala has approached the Supreme Court mainly to change this. Kerala contends that the KIIFB loan should not be treated as a debt of the state. Kerala is proceeding with the case based on advice given by eminent legal experts that parallel institutions like KIIFB do not fall under the definition of 'State' under Article 12 of the Constitution. The Supreme Court is the one who has to decide on this.

The central government is of the position that whether the loan is taken by KIIFB or public sector institutions, they are taken under the guarantee of the government and therefore it can only be counted as the debt of the government. However, last day there was an action from the centre which will give temporary relief to Kerala. Kerala has been allowed to borrow another 3140 crore this year which was cut by the Centre. With this, the state can borrow this amount before March. It is one of the things that the Chief Minister and the Finance Minister have continuously requested from the Central Government in person and through letters, which has now been granted.

The government has decided to borrow 2000 crores from the sanctioned amount this month. This amount will be exhausted when Christmas related expenses and welfare pension are paid. However, there is also concern that the Centre will cut twice the amount from next year's borrowing limit by including the 3140 crore which was cut earlier. The total debt of the state is estimated to be Rs 3,24,000 crore. It is about 39 percent of the total domestic revenue of the state. Among the big states, only Punjab and Rajasthan have taken such huge loans. The loan must be repaid with interest. Looking at that status, Kerala may become a state in the future that does not even have the money to pay interest, let alone pay the principal. In this situation, Kerala should look for ways to find more sources of income.

When Narasimha Rao became the Prime Minister of India, India was in a dire financial crisis. The gold in the Reserve Bank had to be taken to a bank in London and pledged. However, the reform measures taken by the former Prime Minister and Finance Minister Manmohan Singh made a huge leap in the economy. That was the turning point for India to become the fifth-largest economy in the world today. Kerala too should see this economic crisis as an opportunity and adopt ways to escape from it. For that, wasteful expenditure and extravagance should be avoided. Among the loss-making PSUs, the non-core service sectors must be shut down. Along with this, creative projects should also be initiated to earn more income from tourism and the Black sand sector.