 "rupee, loan, indian rupee")
Kerala Finance Minister K N Balagopal on Saturday said the state's liquidity position was severely stressed due to the reduction in the annual borrowing limit and sought the intervention of Union Finance Minister Nirmala Sitaraman into the issue.
In a letter written to the union finance minister, Balagopal said the liquidity stress got aggravated specifically because of the cut in the annual borrowing ceiling for the financial years 2022-23 and 2023-24.
He said Kerala has been relying on its own sources of revenue for meeting the expenditure during recent years, unlike many other states.
Balagopal said the decision of the Union Government to include the borrowing of institutions like KIIFB (Kerala Infrastructure Investment Fund Board) and lower the annual borrowing limit of the state with retrospective effect was causing severe liquidity stress for Kerala.
"I write this letter to invite your kind attention to the issue of liquidity stress being faced by Kerala due to the reduction in annual borrowing limit (Rs 8,000 crore); cessation of GST compensation (loss of around Rs10,000 to 12,000 crore); reduction in Revenue Deficit grant during the current fiscal year (Rs 8,400 crore) compared to the previous year; and reduction in the inter se distribution from the divisible pool during the 15th finance commission (1.92%) compared to 10th finance commission (3.875%)," he said in the letter.
Balagopal said Kerala is on a path of fiscal consolidation through augmentation of its own revenues and rationalisation of expenditure.
He said the state's tax revenue grew at 22.4 per cent (2021-22) and 23.4 per cent (2022-23) and has succeeded in limiting the fiscal deficit to well below 3 per cent of GSDP in 2022-23, while reducing our revenue deficit as a proportion of GSDP to 0.9 per cent.
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"Our annual borrowing has also been kept within the statutorily permissible limits, adhering to the fiscal roadmap laid down by the Finance Commission. All these indicators evidence the commitment of the Government of Kerala to the goal of fiscal consolidation," the minister said.
Balagopal added that the Ministry of Finance has been reducing Rs 3,140.7 crore from the annual borrowing ceiling each year since 2022-23 on account of the off-budget borrowing done through KIFFB and KSSPL (Kerala Social Security Pension Company Limited) during 2021-22.
"The implementation of this new measure with retrospective effect has given a double shock to the state in terms of resource availability and its right to borrow from the open market," he added.
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