In a letter to Union Finance Minister Nirmala Sitharaman, Mr Balagopal also emphasized that the Center rarely imposes any such limit on its own borrowings.
In a letter to Union Finance Minister Nirmala Sitharaman, Mr Balagopal also emphasized that the Center rarely imposes any such limit on its own borrowings.
Reiterating Kerala’s stand on ‘off-budget’ lending, Finance Minister KN Balagopal has written to Union Finance Minister Nirmala Sitharaman demanding that all balances in the state’s public account and borrowings of state government entities should be raised to the net borrowing limit. be excluded while calculating. State Governments.
Shri Balagopal’s demand comes at a time when the Center has been insisting that ‘Off-budget’ lending through Kerala Infrastructure Investment Fund Board (KIIFB) and Kerala Social Security Pension Limited (KSSPL) Should be considered a part of the state debt and adjusted against the net borrowing limit.
Threats to financial autonomy
Noting that his letter dated July 22 was being written “against the backdrop of the grave financial crisis that the state government is currently facing,” Mr Balagopal called on the Center to “control the financial functions of the government”. to stay away from the constitutionally unforgivable attempt. State agencies through misinterpretation of Articles 293(3) and 293(4) of the Constitution.
Article 293
Article 293 of the Constitution of India covers borrowings by state governments.
Mr Balagopal accused the Center of using Article 293(3) of the State Governments to “vibrate the independence of the State and systematically intrude on the financial autonomy” of the State Governments for the stated purpose of fixing the net borrowing limit.
“Article 293(3) can be used only to enforce conditions relating to a request for borrowing from a State Government lawfully. It cannot be used to control or administer the borrowings of the State Government. Under the Constitution, these are matters that exclusively remain within the jurisdiction of the state government,” said Mr. Balagopal.
double standards
In August 2017, the Center had decided to effectively include the balance in the public account of the state while computing the net borrowing limit. In March 2022, the Department of Expenditure determined that, for the purpose of setting limits, borrowings by state public sector companies, corporations, special purpose vehicles and “other equivalent equipment” would be treated as state borrowings.
Mr Balagopal observed that the Centre, imposing such conditions on states to access financial and money markets, imposes any such limits on their own borrowings, taking into account the borrowings of agencies established by them, he said.
In his letter, Mr. Balagopal reiterated that Kerala will be deprived of around Rs 23,000 crore in the 2022-23 financial year, due to a combination of several factors including a reduction of ₹7000 crore in revenue deficit grants and Closing off Goods and Services Tax (GST) compensation of around ₹12000 crore,
accepting the financial reality
Shri Balagopal said that “as long as the realities faced by the State, especially in view of the fact that the State is struggling to emerge from the economic impoverishment arising out of the COVID-19 pandemic, are recognized by the Central Government Social Security – The economic security system that the state has worked so hard to create over the past several decades will be in jeopardy.
In the latest audit report on the state’s finances, the Comptroller and Auditor General (CAG) had refused to acknowledge the state’s finances. Arguments that KIIFB and KSSPL borrowings are not direct liabilities of the State Because they are based on government guarantee.