THIRUVANANTHAPURAM: Finance Minister KN Balagopal has urged his union counterpart, Nirmala Sitharaman, to exempt the funds allocated for National Highway development in Kerala from the state’s borrowing calculations In his representation, Balagopal explained that Kerala had allocated resources for capital expenditure, including 25% of the land acquisition costs for the expansion of National Highways. “The approved budget for this purpose is Rs 6,769 crore, and the state has already expended Rs 5,580 crore for land acquisition. As these expenses are managed through the Kerala Infrastructure Investment Fund Board (KIIFB), they are considered part of the state’s annual borrowing limit as per the Ministry of Finance’s directive,” he said.
The state’s expenditure on land acquisition led to a reduction in its annual borrowing limit, which Balagopal argued disincentivises states from supporting significant capital projects. He also noted that this contradicts the Union government’s policy of encouraging capital expenditure by states.
Balagopal further raised concerns about the retrospective effect of the Union Finance Ministry’s adjustment of OBBs from the net borrowing ceiling for market borrowings. The ministry has been deducting Rs 3,140.7 crore from Kerala’s annual borrowing ceiling for four years starting from 2022-23 due to off-budget borrowing by KIFFB and KSSPL in 2021-22.
He expressed dissatisfaction with the implementation of this measure, highlighting its adverse impact on the state’s resource availability and its borrowing capacity in the open market. He said the state’s liquidity stress got aggravated because of the cut in the annual borrowing ceiling for FY 23 and 24.