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Thiruvananthapuram: Reeling under severe financial crisis, state government has submitted a six-point memorandum to the Union government to ease its financial crisis by requesting to hike its borrowing capacity.
Finance Minister K N Balagopal, in a letter to Union Finance Minister Nirmala Sitharaman blamed “simultaneous shocks to state revenues” and “constraints on borrowing capacity” for the current crisis.
The memorandum sought to restore the reduced IGST amount of Rs 965.16 crore. The state government has constituted the Guarantee Redemption Fund as per the direction of the Reserve Bank of India. Also, Rs 250 crore was credited to the fund.
“State to overcome financial crisis through ‘people’s resistance’: Kerala CM
Chief Minister Pinarayi Vijayan, in a press conference on Wednesday, had severely criticised the centre for the discrimination in allocating central funds to states and also the new restrictions imposed on market borrowings. The CM said the state will overcome the financial sanctions of the centre through “people’s resistance”.
“As RBI has recommended a five-year period for building the corpus, the centre may permit more time, preferably five years, for contributing the remaining amount to the GRF. Hence it is requested to restore Rs 3,323 crore to Kerala’s net borrowing ceiling (NBC) for 2025-26,” it said.
As per the revised guidelines of the Department of Expenditure for FY 2025-26, any shortfall in the GRF contribution, as compared to 0.25 pc of GSDP or the RBI working group recommendation of 5% of outstanding guarantees, is to be deducted from the borrowing limit.
Based on this, Rs 3,323 crore was reduced from the borrowing ceiling for the first three quarters of FY 2025-26. The memorandum sought to reconsider the deduction of Rs 5,944 crore from the NBC on account of “off-budget borrowing” of SPVs.
The centre was asked to re-estimate the current year GSDP and NBC of the state and allow consent for the eligible balance amount of Rs 4,250 crore.
Another request was to restore Rs 1,877.58 crore which was adjusted from the NBC until final GSDP figures of MoSPI are available. The centre was asked to consider the Rs 6,000 crore spent by the state on land acquisition for National Highways development as additional capital expenditure and to allow additional borrowing sanction for the same amount.
