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Kerala urges Centre to lift borrowing limit cuts after launching guarantee fund
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....erala urges Centre to lift borrowing limit cuts after launching guarantee fund<BR>PTI News<BR>Dated:- 3-6-2025<BR>PTI<BR>Thiruvananthapuram/New Delhi, Jun 3 (PTI) The Kerala government on Tuesday urged the Union Finance Ministry to reverse a Rs 3,323 crore cut in its market borrowing limit. The state government informed the Centre that it has taken steps taken to establish a Guarantee Redemption....
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.... Fund (GRF) -- a new requirement under the union government’s borrowing rules for states. After submitting a memorandum to Union Finance Minister Nirmala Sitharaman in New Delhi, Kerala Finance Minister K N Balagopal said the state has begun the process of constituting the GRF and will start contributing to it within the current financial year. Under revised guidelines issued by the Departme....
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....nt of Expenditure for FY 2025–26, states must set aside either 0.25 per cent of their Gross State Domestic Product (GSDP) or 5 per cent of their outstanding guarantees -- whichever is higher --in a GRF. If they fail to do so, the shortfall is deducted from their annual borrowing limit. For Kerala, this has resulted in a reduction of Rs 3,323 crore from its approved borrowing ceiling for the ....
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....first three quarters of the fiscal year, the minister said. Balagopal has requested that this deduction be reversed once the state formally notifies the GRF. "The government is in the process of establishing the fund. Contributions will begin this year," he assured in the memorandum, calling the move essential to "safeguard the financial stability and development trajectory of the state." He s....
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....aid Kerala, a revenue-deficit state with high public welfare spending, has faced growing pressure on its finances. The borrowing limit -- or net borrowing ceiling-- is a critical tool for the state to raise funds through open market operations and meet development needs, Balagopal said. In addition to the GRF issue, the state has also sought the Centre’s reconsideration on an earlier Rs 1,87....
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....7.57 crore deduction. This amount was permitted as additional borrowing in FY 2023-24 due to changes in GSDP estimates but was later adjusted against the FY 2024–25 borrowing limit -- even though final GSDP figures for that year have not been released. Balagopal has requested that the adjustment be shifted to FY 2025–26 in light of more recent, upward GSDP revisions for 2022–23 and 2023....
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....24. The Finance Minister called for "kind and expeditious intervention" from the Union Government to address these matters and help ensure the state’s fiscal balance. PTI TGB ROH<BR> News - Press release - PIB....