Centre-Kerala talks on borrowing limit make no headway

“Rs 5,000 crore will not take us anywhere, we need at least Rs 10,000 crore. They are saying this on the assumption that the suit is liable to be dismissed,” Senior advocate Kapil Sibal, appearing for the ruling LDF government, said.

The SC Tuesday had asked the Centre to consider allowing the state government a “one-time package” in the present financial year to help it tide over funds shortage while the central government could simultaneously impose more stringent conditions for the next financial year.

On Wednesday, Additional Solicitor General N Venkataraman pointed out that in the financial year 2023-24, Kerala had already received consent for borrowing a total of Rs 52,583 crore. He said “based on the projected Gross State Domestic Product for Kerala for 2024-25, the net borrowing ceiling of the state for the year would come to Rs 33,597 crore.”

He said after deductions, Kerala will be left with the borrowing space of only Rs 6,664 crore to meet its requirements for first 9 months of 2024-25 if its demand for sanction to borrow Rs 15,000 crore more this fiscal is granted.

“Going by the expenditure trend of Kerala, it will be extremely difficult for the state to manage its finances… it would not be able to manage in Rs 6,664 crore for the first 9 months… This will trigger serious hardships for the people of Kerala,” he said.