THIRUVANANTHAPURAM: The state government is staring at a major financial crisis following the delay in getting Centre’s sanction for borrowings. The delay is attributed to the Centre’s stand that the borrowings by public-sector undertakings are to be incorporated in the sanctioned borrowing limit of the state.
The Centre’s direction is on the lines of the CAG’s adverse remarks on the off-budget borrowings through the Kerala Infrastructure Investment Fund Board (KIIFB). The CAG had also questioned the constitutionality of raising funds by way of loans through the Kerala Social Security Pension Ltd.
While the mounting debt is a real cause for worry, a delay in sanction for market borrowings will push the state into an unprecedented crisis. It is learnt the state is engaging with the Central government at various levels. The finance minister and secretary are in consultation with their counterparts in the Union government to solve the issue quickly.
The upper ceiling on borrowings fixed for the state government this fiscal is `32,435 crore. The Reserve Bank of India, as per the norm, had published an indicative calendar or scheduling of tranches for borrowing. As per this, the state was entitled for a borrowing of `1,000 crore in April and `3,000 crore in May.
State yet to claim borrowing limit sanctioned for new fiscal
The government has the power to tweak this schedule as per its requirements. The state has not availed of the borrowing limit sanctioned for the new fiscal because of the delay in getting Centre’s sanction.
In April last, the government had capped treasury payments in the wake of fund shortage. Accordingly, the ways and means limit was reduced from Rs 1 crore to Rs 25 lakh. At present, payments above Rs 25 lakh require sanction from the Finance Department. Also imposed is a transfer credit ceiling of Rs 1 crore.
The state government’s outstanding debt, according to the 2021-22 Budget, is Rs 3.27 lakh crore. This is 37.39% of the GSDP, a quantum jump from the 29.82% in 2018-19. In addition to this are the off-budget borrowings through the special purpose vehicles KIIFB (for infrastructure development) and the Kerala Social Security Pension Ltd.
DEBT-HIT
Punjab, Rajast-han, West Bengal, Kerala & Andhra Pradesh are the five states having the highest debt-to-GSDP ratio, as per budget documents of 2021-22
Punjab is the only state that has debt-to-GSDP ratio more than 50% (53.3%).
FM: No crisis in distribution of salary
Finance Minister K N Balagopal has ruled out any sort of crisis with respect to salary distribution of government employees.