Governor, Chief Minister's intervention successful: Kerala gets loan of Rs 5990 crore

THIRUVANANTHAPURAM: The State Governor and Chief Minister achieved successful results by engaging in cooperative dialogue with the centre, avoiding the need for protests or legal actions. On the second day of discussions between Chief Minister Pinarayi Vijayan and Union Finance Minister Nirmala Sitharaman in Delhi in the presence of Kerala Governor Rajendra Arlekar, a letter was received from the Center sanctioning an additional loan of Rs 5990 crore. It is expected that a power reform loan of Rs 6200 crore will also be sanctioned.

States can borrow three percent of the total state domestic product. Therefore, Kerala which has a total income of Rs 13 lakh crore can take a loan upto Rs. 38237 crore. So far, Rs 42237 crore has been taken. The state is in a severe financial crisis due to the reduction in central allocation. It has to borrow about Rs 3000 crore every month to sustain itself. The unusual step of the governor intervening and negotiating with the center was taken in a situation where there was no more loan to borrow.

Kerala has now been granted a special loan of Rs 5990 crore in the name of treasury reserves. This will be taken on Tuesday itself. Since it is the end of the financial year, it is estimated that bills worth Rs 26000 crore will have to be passed and paid this month. There is a shortfall of about Rs 12000 crore. There is a provision to borrow an additional 0.5% of the gross income in the name of electricity reform. Kerala has requested that this amount be allowed.

With only two weeks left for the end of the financial year, the state government has spent only half of it in the project category. This year's project allocation is Rs 38,886 crore. Of this, only 52 percent has been spent so far. Only 54% of the state projects worth Rs 21,838 crore have progressed. Local projects are 45% and centrally sponsored projects are 57%. With the treasury running out, the money for last week's expenses was obtained by taking Ways and Means Advances (WMAs) and overdrafts from the Reserve Bank.