Kerala Finance Minister Seeks Special Aid, Higher Borrowings from Centre

Kerala Finance Minister KN Balagopal met Union Finance Minister Nirmala Sitharaman on Thursday. He presented various demands, including a special package and permission for higher borrowings for the state. A detailed memorandum outlining these demands was submitted to Sitharaman.

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Balagopal highlighted Kerala's fiscal consolidation efforts but noted a severe financial crunch due to limited central transfers and borrowing constraints. He mentioned that Kerala has a commendable record of fiscal consolidation. The state is seeking a special package of at least Rs 24,000 crore in the Union Budget 2024-25 to address liquidity issues over two years starting from 2024-25.

Special Assistance for Vizhinjam Port

The memorandum also requested special assistance for the Vizhinjam International SeaPort Ltd (VISL). Balagopal stated, "Apart from direct investment from the Union government, we urgently need a special capital investment support of Rs 5,000 crore to fulfil our obligations in developing the Vizhinjam port region." Additionally, another Rs 5,000 crore is requested for other infrastructure projects like the Tunnel Road link between Calicut and Wayanad.

The state anticipates losing about Rs 4,710 crore in this and the next financial year due to a new central government measure that retrospectively cuts borrowing limits for KIIFB and the pension company. The memorandum urged reconsideration of this measure and requested permission to borrow Rs 4,710 crore each during the current and next financial years beyond the fixed borrowing ceiling.

After the meeting, Balagopal described it as a courtesy call following Sitharaman's assumption of office post-elections. He reiterated Kerala's strong fiscal management record and stressed the need for additional financial support to overcome current challenges.

The memorandum underscored that Kerala is on a path of fiscal consolidation but faces significant financial stress due to reduced central transfers and borrowing limitations. The state seeks urgent financial assistance to maintain its development trajectory and manage its fiscal responsibilities effectively.

In conclusion, Kerala's demands include a substantial special package, increased borrowing limits, and specific funds for critical infrastructure projects. These measures are essential to address the state's financial challenges and support its ongoing development initiatives.