Centre again rejects Kerala's request to borrow additional funds amid financial crisis
The Central Government has again rejected Kerala's demand to borrow additional funds for daily expenses. The state government has been reeling under severe financial crisis this year.
Thiruvananthapuram: In yet again a backlash to Kerala, the Central Government has rejected the state's request to borrow additional funds amid the financial crisis prevailing for a while now. The Union Finance Ministry replied that Kerala's demand is against the Fiscal Responsibility Act. Only three percent of the gross state domestic product (GSDP) may be borrowed by the state.
Kerala had anticipated to receive an extra loan of Rs 8,000 crore. The State Finance Department is now concerned about how to raise funds for ongoing expenses in the coming months.
State Finance Minister K N Balagopal personally met with Union Finance Minister Nirmala Sitharaman to urge a waiver of the borrowing limit due to the severe financial crisis in the state. The minister had asked for approval to take out loans totaling an additional 1 per cent.
Meanwhile, the Kerala Assembly witnessed heated debates between the ruling LDF and the Opposition on Wednesday over the state's financial crisis. The Left Front criticised central policies for the state's economic crisis, accusing the UDF of siding with the BJP-led Centre while the Congress-led opposition claimed that the Left government's extravagance, financial mismanagement, and poor tax collection were the cause.
Even though Kerala's income and tax revenue increased significantly in the previous year, according to state finance minister K N Balagopal, the BJP-ruled Centre was adamant on financially strangling the state, which is why its share of central taxes, its borrowing limit, and its revenue deficit grant were reduced. The minister added that the state's debt burden was decreasing as its income and tax revenue rose by almost 51% last year, a historically significant increase over prior years.