In the one corner of India where the hammer and sickle mattered, it has been lowered for the first time in nearly 10 years. Kerala has voted out the Pinarayi Vijayan-led Left Democratic Front in such a fashion that nobody in the party not a single opinion poll, not a single exit projection, not even the party general secretary in AKG Bhavan thought it would be this bad. The Congress-led United Democratic Front won 102 seats in the House of 140, the LDF was decimated to 35 while the BJP, the perennial bridesmaid of God's Own Country, finally got its act together to win three seats.

The figures alone are staggering. This time the combined strength of the communist parties is out of power in all the states in India. The Left, a movement that once dominated Bengal, now represents a parliamentary curiosity nationwide. But the voters have not reinstated the old rhythm: that of a government changing hands in the State every 20 years, which the LDF had disrupted in 2021. They've hit a note several octaves higher than that.

The UDF won all the 14 seats in Ernakulam district. The Left got a clean sweep in Malappuram, Wayanad, Kottayam and Idukki. Kasaragod, Pathanamthitta and Kozhikode gave Pinarayi's one seat apiece. Eight sitting Ministers lost outright, these include V.N. Vasavan, P. Rajeev, Veena George, J. Chinchu Rani and M.B. Rajesh. In Ambalapuzha, the very printing press used to print the CPM manifestos was defeated by the party's own former heavyweight G. Sudhakaran, who walked out of the party alleging corruption and nepotism. This wasn't an election loss. It was a self-revocation by vote.

The new Chief Minister V.D. Satheesan was sworn-in at the Central Stadium, Thiruvananthapuram as Kerala's 13th chief minister with senior Congressman Ramesh Chennithala presenting the Home and Vigilance oath and the Indian Union Muslim League's P.K. Kunhalikutty presenting the Industries and IT oath on 18 May. Importantly, Satheesan retained Finance, Law and Ports for himself, rather than delegating the treasury, which has been the usual practice by the chief ministers of the state. The one decision conveys the most honest evaluation of the time: this government is moving into a balance sheet, so stretched the man at the top wants his own fingerprints on every cheque before it leaves the secretariat.

What a balance sheet it is indeed. As of mid-2025, Kerala's public debt, both with and without off-budget borrowings, stood at over ₹4.8 lakh crore. As per the budget papers, it is expected to reach ₹5.44 lakh crore by March 2027. The debt to GSDP ratio stands at around 34 per cent, the fiscal deficit exceeded the cap of 3.5 per cent of GSDP set by the Fiscal Responsibility and Budget Management Act to 3.86 per cent in FY25, and the revenue deficit has increased from 1.6 per cent of GSDP in the previous year to 2.49 per cent in FY25. The worst of the statistics, however, is one that no minister in the outgoing government would dare include in a press release: approximately ninety-eight paise of the rupee borrowed by Kerala during the past few years were used for repaying old debts. In effect the state was borrowing time from its creditors.

This is the inheritance. Which seems to be placed awkwardly next to a manifesto that promised five “Indira Guarantees” – free travel on KSRTC buses for women, ₹1,000 per month for women pursuing college education, ₹3,000 welfare pensions, ₹25 lakh health cover per house hold, and a basket of other commitments. It has been estimated that the free-bus promise alone comes to around ₹3 crore per day, that is, between ₹500 crore and ₹700 crore additional expenditure annually. The cabinet has already given the go-ahead to its rollout from 15 June. ASHA employees are being given an increment of ₹3,000. A new department for senior citizens has been announced. Satheesan also withdrew cases against protestors and denotified all the land acquired for the SilverLine semi-high-speed rail corridor, within 48 hours of assuming office, after scraapping the Left's flagship project. Politically, it is straight politics honest book-keeping with the voter the UDF had always been against SilverLine. Ideologically, it de-funds a controversial capital project off the medium-term map that could be more significant than ideology when the next central transfer review takes place, fiscally.

The other, equally quick step, indicates where the new government wishes to keep the discussion. The former Cabinet Secretary K.M. Chandrasekhar, who is the Chairman of the committee, has been tasked to write a White Paper on the finances of the state, with Additional Chief Secretary K.R. Jyothilal as convenor and economists from the Centre for Development Studies as members. The intent is not so subtlety. The Pinarayi government had done precisely this in 2016, to indict the previous government led by Oommen Chandy. It's come full circle.

But a non-dramatic assessment of Kerala statistics is needed, which politics doesn't permit. The state per capita income is ₹1.90 lakh compared to the national average of ₹1.33 lakh. With 75.1 years, life expectancy at birth is highest in India. Maternal deaths per 100,000 live births is the lowest in the country at 30. Real GSDP grew 6.19 per cent in 2024-25. Though the ratio of the state's debt to the GSDP is high, it is materially less than that of the Union government, which stands around 57 per cent debt-to-GDP. Kerala is not Sri Lanka 2022. It is, however, a high-cost, services-heavy, remittance-dependent economy with a social spending model that has been far ahead of its revenue model and a political class, on either side, that has, for a quarter-century, been kicking the can of structural reform down some very scenic backwaters.

There's a quieter story behind the headlines and it's one that ought to be on anyone's radar on Indian federalism. The BJP's Nemom and Kazhakuttam and Chathannoor wins (with Rajeev Chandrasekhar, V. Muraleedharan and B.B. Gopakumar respectively) are small in numbers and very big in terms of a story. The party's share of votes in Kerala in the past Lokpalayat has risen from 15.54 per cent in 2019 to 19.39 per cent in 2024 and it can now convert the votes into seats in pockets it has nurtured for more than a decade. The undrafted corporation of Thiruvananthapuram, which was won by the NDA in the December local body polls, was the canary. Three MLAs and a corporation is the beachhead the party has been seeking in a southern state long regarded as being on unfriendly soil. It also indicates, with some amount of discomfort for the Congress, that Kerala may be moving albeit slowly but surely towards a three-cornered politics instead of a bipolar one since 1980.

A related point, long made by sober observers in Delhi watching the states' finances as against the geopolitical bandwidth, is that states that fall into structural debt lose bargaining leverage with the Union, transfers start coming with strings attached and the ability to policy their own industrial or infrastructure options is curtailed. Kerala, indeed, is one of the biggest recipients of remittance inflows in India, with its migrants in the Gulf alone estimated to bring back nearly $20 billion annually, which has simply camouflaged rather than addressed a public-finance arithmetic. The only three honest instruments left in the hands of a government that would like to fund welfare without selling assets, taxing migration, or violating FRBM are: collect what is due, plug what is leaking and make productive sectors such as tourism, IT, agro-processing, ports, fisheries, knowledge industries earn more rupees per acre and per worker. Otherwise it's creative accounting.

What the verdict has given, then, has not been a coronation, but an opportunity in a problem. Anti-incumbency was a factor in the Left's loss, if 10 years is long anywhere. It did so as the gold theft case at Sabarimala, the fissures within the party that saw the exits of senior leaders, the scores of working-age young men moving out of villages and the perception that party loyalty was killing institutional integrity, all got worse together. The Congress and its allies have been given a mandate, more a gift of the failures of the LDF than the promises of the UDF.

That's the one distinction that the new chief minister cannot forget. The Indira Guarantees will be implemented they are political instruments now, not options. But if the same government does not work hard on broadening the tax base, monetising the unused assets of the government, making the KSRTC and Kerala State Electricity Board profitable, attracting private investment to manufacturing and tourism and reestablishing the centre-state relationship which had become extremely bad during the previous regime, Kerala would be in a position to exchange one set of problems for another, fancier set.

Kerala has decided for a change. Change votes may or may not happen five years from now, depending on whether the new managers in the state can perform the unsexy math that their predecessors wouldn't do. The people have had their say. The ledger now awaits.