Centre declines Kerala's request for additional borrowing of Rs 19,370 crore

By Aishwarya Nair | First Published Mar 9, 2024, 10:23 AM IST

The Centre previously allowed Kerala to borrow Rs 13,600 crore, however, an additional borrowing of over Rs 19,000 crore was rejected by the Centre on Friday (Mar 08).

In yet another backlash to the state government, the Centre rejected Kerala's demand for borrowing an additional amount of Rs 19,370 crore. This was conveyed by the union finance secretary to a team of officials from Kerala led by Chief Secretary V Venu during their meeting in New Delhi.

Also read: Centre allows Kerala to borrow additional Rs 13,600 cr amid financial crisis

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Speaking to the media, Venu said that the team met the central government officials as per the Supreme Court's direction and requested to allow borrowing of Rs 19,370 crore. He mentioned that the rationale behind the state's request for the extra funds was presented before the Supreme Court during the proceedings.

"Our request was examined by the union finance secretary. However, he was not ready to agree to it," Venu said.

"We asked the central government to correct an error in the borrowing capacity that was allotted to the state of Kerala. Based on guidelines approved by the central government, the state has approved the calculation. However, it turned out that the central government had mistakenly cut down on the borrowing capacity granted to the state government. The state administration proposed today to correct this error," said a source.

The Centre had previously told the court that it would immediately disburse over Rs 13,000 crore to the state. According to the state administration, it qualified for Rs 13,000 crore this year.

While hearing an appeal from the Kerala government, which claimed that the Union of India was interfering with its "exclusive, autonomous and plenary powers" to control the state's budget by setting a borrowing cap, the Supreme Court made the observation.

The court emphasized the importance of continuing the dialogue between the Centre and the state, highlighting that it should not cease solely due to the ongoing lawsuit, underscoring the necessity of resolving the matter.

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