Home india-news Kerala writes to PM to restore borrowing limit to pre-2017 level | Latest News India

Kerala writes to PM to restore borrowing limit to pre-2017 level | Latest News India

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Kerala writes to PM to restore borrowing limit to pre-2017 level | Latest News India

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The Kerala government on Wednesday wrote to Prime Minister Narendra Modi requesting him to increase the borrowing limit of the state and restore it to pre-2017 level, according to the statement released by chief minister’s office.

In the letter, the government said that combining the debt of statutory boards and companies with that of the state was contrary to provisions of federalism and it will imperil borrowing capacity of the state. Earlier, the state had requested the Union government to exclude off-budget borrowings of public entities from the state’s annual borrowing limit. It also pointed out that loans and grants taken by the central PSUs (public sector undertakings) were exempted from such provisions. In October, Kerala finance minister K N Balagopal met Union minister Nirmala Sitharaman in Delhi in connection with the matter.

But the Union government had rejected its contention to exclude two major borrowings from the ambit of the state– 14,000 crore loan taken by the Kerala Infrastructure Investment Fund Board (KIIFB) and 16,000 crore of the Kerala Social Security Pension Limited.

After the state government stopped its funding to the Kerala Social Security Pension Limited, the welfare pensions to different categories were stopped in last three months.

In December, the government had borrowed 1,500 crore from the RBI at 6.5% interest for a period of 10 years to pay salary and pension of its employees.In the current fiscal this was the fifth loan availed from RBI through bond auction

In the Wednesday’s letter, the government pointed out that unnecessary restrictions and capping the borrowing limit were against federal principles of the Constitution. But the Centre had told the state earlier that the rules and regulations “were common for all the states” and “Kerala cannot be given any exemption”.

But the Opposition alleged that the state government’s extravaganza and splurge lead to the sorry situation. “While the state is reeling under acute financial situation, there is no end to the splurge and extravaganza. Ministers change their cars and modify their bungalows without any qualms. It seems fiscal discipline is only meant for common man,” said former planning board member and Communist Marxist Party (CMP) leader C P John.

“Instead of supporting the government against the Centre’s discriminatory polices, opposition parties find lame excuses to corner the government,” said CPI(M) leader S K Saneesh.

Experts also said sharp decline in revenue and increased expenditure triggered such a situation.

“The government generally uses borrowed funds to meet its revenue deficit. Excessive increase in salary and pension, freebies and unplanned expenditure and splurge has led to such a situation,” said economist Mary George adding it is high time for the state to “stop the extravagance and not to use borrowed money to meet routine expenditures”.


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