THIRUVANANTHAPURAM: The Central government has adjusted Rs 14,000 crore worth off-budget borrowings in the net borrowing ceiling (NBC) of the state government. The cut will be in a phased manner. This year it will go down by Rs 3,578 crore from the previously calculated NBC of Rs 32,439 crore for 2022-23.
The OBBs thus adjusted are loans availed of by Kerala Infrastructure Investment Fund Board (KIIFB) and the Kerala Social Security Pension Ltd (KSSPL), Finance Minister K N Balagopal informed the assembly on Thursday. The minister spoke about the crisis for the first time since TNIE exposed the crisis in fixing the state’s NBC a few weeks ago.
The minister called for serious attention of the House into the Central government’s efforts to destroy federalism, and misuse of Central agencies to annul the financial powers of the state government.
The minister said the centre effected a cut of Rs 7,000 crore in the revenue deficit grant this year.
As GST compensation is stopped, the state will not get around Rs 12,000 crore it was supposed to get. Together, this financial year will see a shortage of Rs 23,000 crore. This will create difficulty in meeting expenses for welfare schemes for the poor and that for housing, education and healthcare.
“The financial pressure due to the nonchalance by the Centre will deal a blow to the social and economic security system built by the state over decades,” he said in a statement tabled in the House under Rule 300 of legislative business.
“It also poses a threat to various development projects announced in the budget, social security pension payment, Life Mission, education and health sectors,” he added. The Centre did not pay attention to the states’ demand to increase funds in the wake of the severe financial crisis induced by the pandemic. KIIFB and the KSSPL were formed to tide over the state’s financial crisis and to implement major development and welfare projects.
The minister said the Central government on March 31, 2022, issued an order slashing the borrowing power of state governments. It said borrowings by special purpose vehicles like KIIFB and KSSPL will be adjusted in the NBC. For this, the Central government misinterpreted Article 293 (3) of the Constitution. Even doing so, the Central government exempted similar agencies and public sector enterprises under it from the new condition. It also robbed off the state governments’ power for viability gap funding.