Thiruvananthapuram: Staring at a near-empty exchequer, the Kerala Government has approached the Reserve Bank of India seeking permission to borrow Rs 8,000 crore over the first three months of the new fiscal.
As per the proposal, the State Government seeks to borrow Rs 2,000 crore this month and Rs 4500 crore next month, in addition to Rs 1,500 crore in June. Although the Reserve Bank has accorded an in-principle nod to the proposal, the final decision will be subject to permission from the Central Government.
The budget documents reveal the State’s plan to borrow Rs 25,646 crore from the open market during the financial year that just commenced. Though it had initially planned to borrow Rs 22, 184 crore in the previous fiscal, the actual amount mobilized stood at Rs 35,339 crore as it received a nod from the Centre to raise the limit of borrowing on account of the efficient performance staged in various fields.
All these loans have been availed at a higher rate of 7.5 percent as against the average interest rate of 6 percent in the previous years. Although the limit of borrowing was cut down on account of the loans availed by KIIFB (Kerala Infrastructure Investment Fund Board) and the Pension Company as the state’s own debt, the allotment of additional amount facilitated smooth disbursal of salary and pension last year. The rise in tax revenue and the cost-regulation measures, including that of the plan expenditure, too yielded good results.
The decision to freeze temporarily all arrears due to the government employees and pensioners too helped save a major expenditure. The proposal to borrow Rs 3,500 crore is being initiated in view of the retirement of government employees from service en masse.
Rs 35,339 cr loan availed last year
Last year, the State borrowed a total of Rs 35,339 crore with a repayment period varying from 10 to 35 years. The amount was availed in 22 instalments at interest rates ranging from 7.31 percent to 7.85 percent.
