The growing fiscal obligation of the Kerala state government is increasingly met from debt liabilities. However, the increased borrowing by the state governments over a period of time creates a burden of repayments comprising interest and principal amount on present as well as future generations. The growing level of debt at an unsustainable level eats away the resources required for other urgent developmental needs of the society. Maintenance of a sustainable and stable level of public debt is a challenge for any state government and it is all the more important in the State of Kerala where the scope of internal mobilization of resources via growth propulsion in primary and secondary activities is limited, at least in the immediate future. The stability and sustainability of debt is influenced to a great extent by the growth of Gross State Domestic Product (GSDP), fiscal deficit, revenue receipt, state's own revenue receipt, primary expenditure, and primary deficit. Thus the action taken on revenue and expenditure of the State and also the strict adherence to fiscal discipline can ensure the stability and sustainability of public debt.