Kerala govt seeks ₹7,900 cr extra borrowing from Centre, cites Onam expenses

Thiruvananthapuram: Kerala government on Monday urged the Union government to permit an additional borrowing of ₹7,900 crore this fiscal and to restore around ₹4,300 crore deducted in recent adjustments, citing urgent expenditure needs ahead of Onam.

In a memorandum to Union Finance Minister Nirmala Sitharaman, Kerala Finance Minister K N Balagopal warned that shrinking fiscal space was affecting the state’s ability to meet essential commitments, reports PTI. The state’s debt-GSDP ratio has declined from 38.47 per cent in 2020–21 to 34.13 per cent in 2024–25, he noted.

Kerala is seeking ₹7,877.57 crore in additional borrowing and the restoration of ₹4,288.16 crore deducted from its borrowing limit. Balagopal stressed that Kerala uniquely bore 25 per cent of land acquisition costs for national highway widening, funded through state borrowing, and urged the Centre to treat it as additional capital expenditure for the project.

The memorandum requested permission to borrow ₹6,000 crore in 2025–26 without conditions, over and above the Net Borrowing Ceiling. It sought approval to raise ₹1,877.57 crore through Open Market Borrowing due to GSDP variation.

The state also asked for the immediate restoration of ₹3,323 crore deducted over non-contribution to the Guarantee Redemption Fund (GRF), which influences borrowing limits. An additional ₹965.16 crore was deducted in April 2025 as an adjustment for the shortfall in the Integrated GST balance as of March 31, 2025.

“These deductions have severely impacted the state’s resource position. We request that the reduced IGST amount be restored within the current fiscal,” the memorandum stated. Balagopal argued that restoring these funds and granting additional borrowing capacity were crucial for maintaining fiscal stability and meeting pressing expenditure obligations.