Amid economic crisis, Centre allows Kerala to borrow Rs 21,253 crore

In a move to assist Kerala in tackling its severe economic challenges, the Government of India has sanctioned borrowings of up to Rs 21,253 crores for the state until December 2024. This substantial financial aid comes as Kerala grapples with various economic woes, including salary delays for government employees and stalled development projects.

Kerala Finance Minister KN Balagopal had previously expressed concerns about the state’s dwindling share of funds from the Centre, stating that while the Centre’s tax revenue has increased 11-fold, Kerala’s share has only grown by 8.8 times, leading to a sharp decline. Balagopal also highlighted the state’s struggle to meet expenditure for its social welfare schemes, with delays in pension payments to 62 lakh families due to lack of funds from the Union government.

The Centre’s decision to sanction the borrowing limit was announced by Minister of State for Electronics and Information Technology, Rajeev Chandrasekhar, on the social media platform X. Chandrasekhar urged Kerala Chief Minister Pinarayi Vijayan to utilize the funds judiciously for the welfare of the people, without any instances of leakage or corruption.

In addition to the financial assistance, the Centre has called upon the Kerala government to take immediate action on key initiatives to address the state’s economic challenges effectively. These include the payment of salaries and pensions for government employees, execution of vital infrastructure projects like the Coastal Protection and Mini Harbour Project, completion of the ongoing recruitment process for Coastal Police Officers, and acceleration of pending development projects in Thiruvananthapuram.

The move comes as a relief for Kerala, which had previously taken the matter to the Supreme Court, alleging that the Centre’s new rules, particularly the Net Borrowing Ceiling (NBC) imposed by the Finance Commission in 2021, have compounded the state’s financial woes. The Supreme Court has now urged the Centre to consider giving Kerala a one-time package for tackling its financial crisis.

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