Kerala to go for Rs 1,000 crore loan

In order to tide over the financial stringency, the Kerala government has opted to mobilise Rs 1,000 crore through the sale of 10-year securities in the open market.

According to a notification issued by the additional chief secretary in the department of finance recently, the loan proceeds would be utilised for financing developmental activities in the state.

The government-backed stock will be sold on Tuesday through the Reserve Bank of India (RBI) auction system.  

Along with Kerala, 12 other states also are raising funds through the sale of securities, aggregating a total Rs 11,620 crore.

These include Karnataka and Uttar Pradesh that would mobilise Rs 1,500 crore each, followed by Gujarat and Tamil Nadu with Rs 1,200 crore each and Kerala and Madhya Pradesh Rs 1,000 crore each.

According to reports, Kerala has opted for this route for the ninth time this financial year, with the total debt rising by Rs 8,000 crore this financial year.

The state is now in a serious financial crunch as revenue collections this year, especially through commercial taxes, have dipped drastically.

A major chunk of the market borrowings had been utilised for salary and pension disbursements.

The accumulated debt burden of the state stood at  around  Rs 114,000 crore, constituting 28.29 per cent of the gross state domestic product.