Kerala borrowing limit not reduced; LDF govt extravagance reason for state's financial crisis, claims Centre

The Union Minister said that for the financial year 2023-24, Kerala was allowed to borrow Rs 32,442 crore as 3% of its Gross State Domestic Product

The BJP-led union government on Monday refuted the allegations of the ruling-Left government in Kerala that it had reduced the borrowing capacity of the state and instead blamed the LDF administration's "financial mismanagement and extravagance" for the state's debts.

Union Minister of State for Parliamentary Affairs and External Affairs V Muraleedharan claimed it was the "financial mismanagement and extravagance" of the LDF government that resulted in the financial crisis the state was facing and why it had a huge debt.

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He termed as an "extravagance" the honorarium approved for expelled Congress leader K V Thomas, now appointed as the state's representative in New Delhi, and the foreign trips of Kerala Chief Minister Pinarayi Vijayan and the state's ministers.

The minister further said that some of the neighbouring countries of India were in dire economic straits due to their financial policies and as the Centre did not want a similar situation here, restrictions were placed on borrowings by states.

"So I would like to ask the state finance minister and the chief minister not to foist the blame for it on the central government," Muraleedharan told reporters at a press conference held by him here.

The union minister said he was not sure whether Chief Minister Vijayan and State Finance Minister K N Balagopal were blaming the Centre "because they lacked knowledge about such matters" or if it was a "deliberate and conscious" attempt to mislead the public.

While Vijayan on Sunday lashed out at the BJP-ruled central government by terming its alleged move to reduce Kerala's borrowing capacity by half as "sadistic", Balagopal, two days before that, had contended that it was "part of the union government's political vendetta".

Balagopal had claimed that no reason was given for cutting the state's borrowing limits by half. Refuting the allegations of the LDF government, Muraleedharan cited figures of the borrowings allowed for the state and how much of it has allegedly already been availed of by Kerala.

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The union minister said that for the financial year 2023-24, Kerala was allowed to borrow Rs 32,442 crore as 3 per cent of its Gross State Domestic Product (GSDP) in accordance with the recommendations of the 15th Financial Commission.

Additionally, it was also permitted Rs 20,985 crore under replacement borrowing and besides that, Rs 1,755 crore was sanctioned for the state as central contribution under the National Pension Scheme, he said.

"In total Rs 55,182 crore is allowed to be borrowed in this financial year and out of that Rs 34,661 crore has already been taken by the state till now.

Of the remaining Rs 20,521 crore, the Centre sanctioned Rs 15,390 crore for the first nine months. "The balance Rs 5,131 crore would be given towards the end of the financial year," the minister said.

He said if the amount for the last quarter was denied by the Centre, then there may be some weight in the claims by Balagopal, but the Union government has not said anything like that.

"So where is the reduction? Therefore, there is no question of political vendetta. Either the state Finance Minister and Chief Minister have no clue about how these figures were arrived at or they are deliberately and consciously trying to mislead the public," Muraleedharan contended.

He also claimed that according to a recent RBI report, Kerala was one of the five states in the country with the highest debts and asked why the state required so much money.

"Is it to pay honorarium to people like K V Thomas, who probably already gets pension for being a former teacher and a former MP? Is it for foreign trips of the CM and the ministers? "This kind of extravagance cannot be permitted by the Centre as otherwise we might end up in the same financial situation as some of our neighbouring countries. That is the reason for the restrictions on borrowing by states," Muraleedharan said.

The CPI(M)-led LDF government in Kerala last week approved an honorarium of Rs one lakh per month for its Cabinet rank special representative, expelled Congress leader K V Thomas, in New Delhi.

The decision was taken in a Cabinet meeting. Besides the honorarium, the Cabinet also allowed Thomas to hire two assistants, one office attendant and a driver.