Since the mid-1980s, Kerala has been battling fiscal stress, despite the state’s economy growing faster than the national economy. Moreover, this stress is only getting aggravated, even though Kerala’s tax effort has been recognised as above average. Studying available data with an alternative approach points to the failure of public resource mobilisation as the primary cause of this fiscal stress. The inability to harness the state’s fiscal potential, an incorrect perception about the state’s fiscal situation, and a lack of political will to address the situation have exacerbated the crisis.
