New Delhi, Aug 11 (PTI) Kerala on Monday urged the Centre to allow the state to borrow an additional Rs 7,900 crore as well as restore around Rs 4,300 crore that has been deducted in relation to certain adjustments.

The state, which saw its debt-GSDP (Gross State Domestic Product) ratio decline to 34.13 per cent in 2024-25 from 38.47 per cent in 2020-21, has sought the amounts citing the significant impact of the deductions on its fiscal health and its ability to meet essential expenditures especially in view of huge cash outflow in connection with the upcoming Onam festival.

Kerala Finance Minister K N Balagopal on Monday submitted a memorandum to Union Finance Minister Nirmala Sitharaman, listing out the immediate needs, and highlighted that the state faces challenges in meeting its expenditure commitments due to shrinking fiscal space.

Additional borrowing of Rs 7,877.57 crore and restoration of deducted amounts worth Rs 4,288.16 crore have been sought.

According to Balagopal, Kerala is the only state which has borne 25 per cent of the land acquisition cost of national highway widening and the amount was raised through state government borrowing.

While mentioning that the amount was deducted from the state's annual borrowing limit, he urged Sitharaman to consider the same as an additional capital expenditure for the national highways.

"We request to allow the state to borrow Rs 6,000 crore in the current financial year without any conditions, over and above the Net Borrowing Ceiling fixed by the Government of India for 2025-26," the memorandum said.

Further, Balagopal has sought permission for raising Rs 1,877.57 crore through Open Market Borrowing (OMB) and cited the amount pertained to variation in the GSDP.

Among other demands, the state has requested the Union government to urgently restore Rs 3,323 crore which was deducted in connection with non-contribution to the Guarantee Redemption Fund (GRF).

States are required to make contributions to the GRF which is also a parameter for determining states' borrowing ceilings. As per the memorandum, Rs 965.16 crore was deducted in April 2025 on account of the adjustment of Advance Apportionment to make up for a shortfall in the IGST (Integrated Goods and Services Tax) balance as on March 31, 2025.

"This deduction has adversely affected the resource position of the State. Therefore, it is requested that the reduced amount of IGST may be restored to the State in the current financial year," it added. PTI RAM TGB MR MR

Additional borrowing request: state seeks permission to increase fiscal borrowing and restore deducted funds for capital and festival spending. Kerala requests central approval to raise additional borrowing of Rs 7,877.57 crore and restoration of Rs 4,288.16 crore deducted from its borrowing limit, citing pressures from festival related and other expenditures. The state asks that Rs 6,000 crore be permitted over and above the Net Borrowing Ceiling without conditions and Rs 1,877.57 crore be allowed via Open Market Borrowing for GSDP variation. It seeks restoration of amounts deducted for non contribution to the Guarantee Redemption Fund and for IGST Advance Apportionment adjustments, and requests that 25% state contribution to national highway land acquisition be treated as additional capital expenditure.