Financial crisis: Union govt gives Kerala ‘temporary permission’ to borrow Rs 5,000 cr

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KN Balagopal | hoto: Mathrubhumi

Thiruvananthapuram: The state government on Friday evening received a 'temporary permission' from the union government to borrow Rs 5,000 cr to weed out the imminent financial crisis. However, the contention over the previous borrowings and the balance sheet of the state remains, they reminded.

Earlier on Friday, finance minister KN Balagopal had sought the intervention of CM Pinarayi Vijayan over the delay in permission to borrow money, during the cabinet meeting. He told his fellow ministers about the financial situation. The tax income is less as this is the beginning of the financial year. Normally, the approval for borrowing money from RBI (bonds) and banks come in April and May. But this time it was denied as the union finance ministry objected to the numbers of previous year. Kerala officials say that they have submitted the explanation and the issue will be resolved soon.

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As per the limit set by the union finance department, Kerala can borrow up to Rs 32,425 cr.

CAG had said that borrowings of Kerala Infrastructure Investment Fund Board (KIIFB) and the Public Service Undertakings should also be accounted in the government's balance sheet. However, the state objected to this.

The union government has also sought explanation on the utilisation of the additional loan permitted during Covid-19 lockdown.

If the union government refuses to budge, the state will see a reduction of at least Rs 12,000 cr in the borrowings. It will lead to prioritisation of development projects.

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