Fri Oct 03 13:16:29 UTC 2025: Okay, here’s a summarized version of the text and a rewritten news article based on it:

**Summary:**

A new research paper analyzing recent fiscal trends and a Comptroller and Auditor General (CAG) report suggests that Kerala can stabilize its debt through disciplined management while pursuing development goals. The paper highlights Kerala’s improved debt ratio compared to previous projections and other states, while acknowledging challenges such as central restrictions on revenue and the pressure of an aging population. The paper contrasts these findings with a previous Reserve Bank of India report that had flagged Kerala’s fiscal unsustainability. The paper emphasizes that continued economic growth, fiscal responsibility, and relaxation of central restrictions are crucial for Kerala to achieve its development goals while maintaining fiscal responsibility.

**News Article:**

**Kerala’s Debt Situation More Stable Than Feared, New Research Suggests**

**THIRUVANANTHAPURAM, October 3, 2025** – Recent fiscal trends indicate that Kerala’s financial situation may be more stable than previously feared, according to a new research paper analyzing the state’s debt profile. The paper comes in the wake of a Comptroller and Auditor General (CAG) report that paints a relatively optimistic picture of Kerala’s fiscal health.

The paper, titled “Kerala’s Debt Story: From Pandemic Spike to Sustainable Path” by P.S. Renjith of the Gulati Institute of Finance and Taxation (GIFT), suggests that Kerala can achieve a sustainable debt level through disciplined management, while simultaneously pursuing its development goals.

The CAG report, “State Finances 2022–23: A Decadal Analysis,” revealed that Kerala’s outstanding liabilities as a share of its Gross State Domestic Product (GSDP) stood at 37.68%, and public debt at 24.7%. These figures place Kerala in a relatively moderate position compared to several other states.

The paper notes a significant improvement in Kerala’s debt ratio, from a peak of 39.96% in 2020-21 to 34.2% in 2023-24, with budget estimates projecting a further decrease to 33.8% by 2025-26.

These findings contrast with a 2022 Reserve Bank of India (RBI) report, which had identified Kerala as one of the most fiscally unsustainable states, projecting that it would exceed the 35% debt threshold well into 2026-27. The new analysis sparks fresh debate, with the CAG report focusing on balance rather than crisis.

However, the paper cautions that Kerala faces challenges, including central government restrictions on revenue mobilization and the growing pressures of an aging population. It emphasizes the importance of maintaining fiscal consolidation without compromising welfare and development activities.

“If Kerala sustains its growth momentum, keeps borrowing disciplined through rationalised revenue expenditure, manages the rising pressures of an ageing population, and benefits from a relaxation of the Central restrictions on revenue mobilisation, it can not only stabilise debt but also set an example of how development goals and fiscal responsibility can move together,” the paper concludes.

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