Chief Minister, Shri Pinarayi Vijayan has welcomed the decision to increase the borrowing limit of the States. “Kerala has been in the forefront in demanding a hike in the borrowing limit of the States and we welcome this decision but it is not as demanded. We are not happy with the conditions set for the use of the increased limits.”

The increase from 3 to 3.5% is without any conditions but the 1% hike from 3.5 to 4.5% is subject to conditions like reforms in the public distribution system, the ease of doing business, energy and the local bodies in the city. There will be an increase of 0.25% for each sectoral reform. And finally, the increase from 4.5 to 5.5 % can be achieved only if three out of the four reforms were implemented successfully. Kerala can get a 0.5% increase, without any conditions, on the current borrowing limit of Rs 27,100 crores (Rs 4,500 crores only).

“The States’ domestic revenues have fallen drastically during the Covid situation. So even if the borrowing limit is increased, it will be of limited benefit. Such preconditions are not acceptable in a federal setup”, he added.

Minister of Health & Social Justice, Smt K K Shailaja; Revenue Minister, Shri E Chandrasekharan, and Chief Secretary, Shri Tom Jose IAS were also present during the briefing.