THIRUVANANTHAPURAM: The Kerala cabinet meeting on Wednesday decided to write to Prime Minister Narendra Modi seeking to refix the state's net borrowing ceiling as per the conditions that existed before August 2017.
The memorandum will list various financial constraints faced by the state owing to the policies adopted by the Centre in violation of principles of federalism, said an official note.
The decision follows the severe financial crisis faced by the state.
The state wants the Centre to exclude borrowings by state government entities in determining the net borrowing ceiling. The state faced a drastic cut in the NBC after the Centre decided to consider borrowings by state government agencies as off-budget borrowings (OBBs).
According to the state government, this was done by misinterpreting Article 293(3) of the constitution.
The state government's claim is that the scope of Article 293(3) and (4) are limited to the State as defined under Article I (1) of the Constitution. It cannot be extended to include the debt of Government Agencies, including Companies and Statutory Bodies, regardless of whether the Legislature of the State in its wisdom decides to finance them by way of grant or assignment of taxes and other revenues through its Budget, the state will point out in the memorandum.