Vijayan refutes 'debt trap' claim; says State moved ahead despite 'financial blocks' by Centre

Kerala Chief Minister Pinarayi Vijayan on Monday firmly denied the assertion that the state is caught in a “debt trap,” emphasising that the Left Democratic Front (LDF)-led government has driven unprecedented economic growth over the past decade despite financial challenges, natural disasters, and alleged neglect by the Central government.

Speaking ahead of the April 9 Assembly election, Vijayan said the LDF is confident and seeking a third consecutive term to complete its vision of a ‘New Kerala’. He confirmed he will contest once again from the Dharmadom constituency. “One thing I can say with confidence about Kerala is that no matter how severe the crisis, the state will continue to move forward without faltering. Over the past decade, even while facing major challenges like floods, pandemics, and financial constraints, we have been able to carry forward both development and welfare together. This has been possible due to clear direction in governance and consistent policy decisions,” Vijayan said.

At a press conference in Kollam district, Vijayan recalled Kerala’s financially weak position during 2011-16, noting that the present progress is a continuation of efforts begun when the LDF government took office in 2016. “The state’s GSDP (Gross State Domestic Product) itself is proof rising from ₹3.24 lakh crore in 2010-11 to ₹14.27 lakh crore today. Such growth within a decade is not ordinary,” he stated.

He highlighted significant increases in public expenditure, rising from an average ₹68,000 crore during the United Democratic Front (UDF) tenure to over ₹1.75 lakh crore now, with ₹1.74 lakh crore spent last year and an expected ₹1.92 lakh crore this year. Vijayan stressed that this spending reflects balanced investments in development and welfare.

Addressing the state’s debt, the Chief Minister said, “The debt-to-GSDP ratio has come down from 38.47 per cent in 2021 to 33.44 per cent now, which reflects prudent financial management. Therefore, claims that Kerala is in a financial crisis are politically motivated and not based on facts.” He asserted that Kerala now has a strong economic foundation, robust revenue capacity, controlled debt, and the resilience to withstand crises—a result of the LDF’s vision and governance continuity from 2016 to 2026.

Vijayan criticised the Central government for policies he claimed have resulted in a revenue loss of nearly ₹2.5 lakh crore over five years. “If the state had received its rightful share from the Centre and had been allowed adequate borrowing, Kerala could have moved forward without any financial stress. That is what the experience of the past decade shows,” he said.

The Chief Minister detailed efforts to revive traditional industries such as cashew, coir, and handloom, sectors he said were rescued from collapse under the LDF government. He described policies to protect workers, modernise industries, diversify products, and reopen factories, including the formation of the Kerala Cashew Board and allocations for raw cashew imports and worker gratuities.

Vijayan outlined financial support to the handloom sector, including ₹691 crore spent on the free school uniform scheme and ₹107.06 crore provided as rebates and income support to thousands of weavers. A Cotton Board was established and investments made to revive Hantex, the apex body of primary handloom weavers’ co-operative societies in Kerala.

In the coir sector, ₹1,243.65 crore was invested over the last decade through income support, price stabilisation funds, and fibre bank schemes. Export expansion was pursued in markets like the US and UK via online platforms, and worker insurance coverage ensured. Similarly, the Khadi sector received ₹266.25 crore as income support and ₹46.56 crore in incentives. Efforts to promote bamboo and handicrafts included strengthening the Bamboo Corporation and setting up incubation centres and bamboo bazaars.

Highlighting the upcoming election, Vijayan urged voters to base their decisions on evidence rather than “baseless propaganda.” “Ultimately, the question before the people in this election is whether to move forward based on evidence and facts, or to believe baseless propaganda. The people of Kerala have consistently supported us over the last ten years, and we expect that support to continue,” he said.

“We believe in the wisdom of the people. They know who stood by them during their darkest hours. They know who is working for the future of their children. We are ready for the battle, and we are confident that the people of Kerala will choose progress over communalism and stagnation,” he added.

The day before the press conference, Prime Minister Narendra Modi, at an election rally in Palakkad, criticised the Kerala government’s debt, accusing both the LDF and UDF of selfish politics undermining the state’s finances. Modi stated that Kerala’s debt has more than tripled in two years to over ₹5 lakh crore and claimed no new industrial projects have been started during the past decade.

The press conference ended amid protests from some journalists unhappy that Vijayan did not take their questions.

The Kerala Assembly election is scheduled for April 9, with 140 seats contested. Vijayan will seek a mandate from the Dharmadam constituency in Kannur for the third time, having previously contested successfully from Kuthuparamba and Payyannur. In the Dharmadam constituency, the United Democratic Front has nominated Youth Congress State general secretary VP Abdul Rasheed, and the BJP has chosen K Ranjith as its candidate. Dharmadam is one of seven assembly segments forming the Kannur Lok Sabha constituency, which includes Thaliparamba, Irikkur, Azhikode, Kannur, Dharmadam, Mattannur, Peravoor, Payyannur, Kalliassery, Thalassery and Kuthuparamba. Vote counting will take place on May 4.