📄 Abstract
Keralas public finance system is currently experiencing one of the most serious fiscal crises in its post-reform history. The state, long recognised for its high human development indicators and welfare-oriented governance model, now faces persistent revenue deficits, rising debt burdens, increasing committed expenditure, and growing constraints on fiscal flexibility. This paper critically evaluates the structural causes of Keralas fiscal stress, with particular focus on the effectiveness and limitations of current government responses. While the state government has attempted to address fiscal pressures through borrowing-led adjustment, off-budget financing mechanisms, tax mobilisation measures, expenditure controls, and infrastructure-led investment through the Kerala Infrastructure Investment Fund Board (KIIFB), these measures have largely provided temporary relief rather than long-term structural correction. The paper argues that Keralas fiscal crisis is not merely cyclical but deeply structural, rooted in demographic transition, weak industrialisation, dependence on consumption-driven taxation, rising pension liabilities, and constraints within Indias federal fiscal architecture. The study critically examines ongoing reforms and proposes a broader framework for fiscal sustainability centred on productive economic expansion, pension reform, public enterprise restructuring, improved fiscal transparency, targeted welfare delivery, and cooperative federalism. The paper concludes that Keralas long-term challenge is not whether it should continue as a welfare state, but whether it can transform itself into a fiscally sustainable productive welfare state.
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📚 How to Cite:
Dr. Anna Abraham Pachayil, Ms. Jumanath P J, Dr.Manu J Vettickan , PATHWAYS FOR RESOLVING KERALA'S PUBLIC FINANCE CRISIS: CRITICAL EVALUATION OF GOVERNMENT RESPONSES AND POLICY SOLUTIONS , Volume 11 , Issue 5, May 2026, EPRA International Journal of Research & Development (IJRD) , DOI: https://doi.org/10.36713/epra27928