Kerala election results: UDF's welfare dreams amid fiscal headwinds

UDF's expansive welfare promises in Kerala face scrutiny as high debt, fiscal deficit and limited capital spending raise questions on sustainability

The United Democratic Front’s (UDF’s) manifesto promises five “Indira guarantees” to Kerala’s voters, including ₹1,000 monthly aid for collegegoing women, increasing monthly welfare pensions to ₹3,000 and ₹25 lakh health cover for each household. But Kerala’s debt-to-Gross State Domestic Product (GSDP) ratio stood above 34 per cent in 2024-25 and is projected to remain elevated in the next two financial years. Moreover, its fiscal deficit widened to 3.86 per cent of GSDP in FY25, marginally above the Fiscal Responsibility and Budget Management Act limit of 3.5 per cent. 

The state’s own tax revenue-to-GSDP ratio has also remained flat at around 6 per cent for a decade. It constitutes around 60 per cent of total revenue receipts.