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Kerala Finance Minister K.N. Balagopal
| Photo Credit: PTI
The Centre is yet to respond to the Kerala government’s request to exclude the share of the land acquisition cost for national highway (NH) development borne by it from the annual borrowing limit of the State.
Finance Minister K.N. Balagopal had conveyed Kerala’s requirement to Union Finance Minister Nirmala Sitharaman in person when he met her in New Delhi on October 7, 2023.
Mr. Balagopal said Kerala was yet to receive a response from the Centre on the matter.
Kerala’s grievance
The Kerala government’s grievance is that since this expenditure was made through the Kerala Infrastructure Investment Fund Board (KIIFB), the Finance Ministry was treating it as part of the borrowing limit.
From an approved ₹6,769 crore, Kerala had spent ₹5,580 crore towards land acquisition costs for NH widening.
Kerala’s open market borrowing limit has been a contentious topic, with the Centre treating ‘off-Budget’ borrowings by the KIIFB and the Kerala Social Security Pension Limited (KSSPL) as direct debt of the State.
In his representation to Ms. Sitharaman, Mr. Balagopal had observed that on account of the Centre’s stand, Kerala faced a situation where it spends money on acquiring the land but suffers a cut-back in its annual borrowing limit for incurring the expense.
An earlier request made by Kerala for an “ad hoc” borrowing increase of 1% of the gross State domestic product(GSDP) above the ceiling set for the current fiscal had not received a favourable response from the Centre. Mr. Balagopal had placed the State’s request before the Centre at a meeting with Ms. Sitharaman in July this year.
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