Kerala to borrow Rs 2000 crore as Centre increases borrowing limit
The Kerala government has decided to borrow Rs 2,000 crore as the Centre increased the borrowing limit by excluding Rs 3,140 crore which was earlier availed by KIIFB and Kerala Social Security Pension Limited (KSSPL).
FollowThiruvananthapuram: In a temporary relief for Kerala amid the financial crisis, the Central government has decided to exclude Rs 3,140 crore from the borrowing limit of the state. This amount was availed earlier by Kerala Infrastructure Investment Fund Board (KIIFB) and Kerala Social Security Pension Limited (KSSPL). The union government had previously chosen to include KIIFB and KSSPL's borrowings towards the state's borrowing cap. KN Balagopal, the finance minister for Kerala, challenged this to the union government.
This paves the way for the distribution of welfare pensions before Christmas. The Finance Department is in the process of taking an emergency loan of Rs 2000 crore. With this, a two-month welfare pension would be distributed.
The Centre's decision also comes at a time when the Kerala government moved the Supreme Court alleging the union government of interfering in the exercise of its "exclusive, autonomous and plenary powers" to regulate the state's finances by imposing a ceiling on net borrowing.
It alleged that the Union government "seeks to interfere with the finances of the state by (i) imposing a net borrowing ceiling on the plaintiff state in the manner deemed fit by the defendant Union, which limits borrowings from all sources including open market borrowings…".
In March, KN Balagopal reported to the state assembly that the union government was attempting to undermine the KIIFB, which provides funding for most of the state's development initiatives. According to Balagopal, one strategy used by the union government to strangle the state's finances was to add KIIFB and the firm that manages social security pensions to the state's existing debt.Â
The Kerala government has decided to borrow Rs 2,000 crore in light of the recent events. The idea is to sell bonds to the market to raise the necessary funds. The finance department announced in a statement that the auction will take place on December 19. It further stated that the funds are being raised for state development initiatives.
