Kerala CM defends borrowings, blames Centre's grant cut for fiscal strain
Kerala CM V.D. Satheesan defended state borrowings, citing the Centre's withdrawal of the Revenue Deficit Grant and a reduced borrowing ceiling.
Chief Minister V.D. Satheesan on Wednesday defended the Kerala government's recent borrowing activity, asserting that governments worldwide rely on loans to meet expenditure. He was addressing the media in Thiruvananthapuram.
Mr. Satheesan highlighted a significant fiscal challenge: the state has been deprived of the Revenue Deficit Grant that it received until last year. He noted that the 15th Finance Commission had allocated ₹55,000 crore to Kerala under this head, but the 16th Finance Commission has discontinued it. The previous state Budget had factored in this grant, and the anticipated increase in tax devolution from the Union government has not materialised. He also pointed out that the state's borrowing limit has been reduced from 3.5% to 3% of the Gross State Domestic Product (GSDP).
The Chief Minister contrasted the current government's approach with that of its predecessor, the Left Democratic Front (LDF). He stated that the previous administration had relied on off-Budget borrowings through the Kerala Infrastructure Investment Fund Board (KIIFB), leaving the current government with an additional debt burden of ₹38,000 crore. A significant portion of the expenditure during the Onam season was directed towards servicing these inherited liabilities, he said.
Mr. Satheesan also outlined the government's goal of making the Kerala State Road Transport Corporation (KSRTC) self-sufficient, without relying on state grants. He commended the Civil Supplies Corporation for its role in ensuring the availability of essential goods across the state during the Onam festival.
Responding to opposition allegations regarding the MDMA case involving his social media coordinator, the Chief Minister dismissed claims of any attempt to sabotage the investigation. He said that a forensic examination of the phone in question led to the arrest of a woman in Gwalior and subsequently a Ghana national linked to the drug trade. He alleged that the previous government had extended political patronage to drug gangs, whereas the current administration is acting against all offenders irrespective of their political affiliations. He also praised Home Minister Ramesh Chennithala for his effective leadership of 'Operation Toofan'.