Borrowing limit: Will take further action after getting explanation

THIRUVANANTHAPURAM: The finance department has stated that it will take further action after receiving an explanation from the Centre over its decision to slash the state's borrowing limit. The final decision will be made by the Chief Minister's office.

The Finance Commission has stipulated that three percent of the state's gross domestic product can be borrowed. This is what FRBM Act also says. However, the central government has the authority to determine the borrowing limit for the respective year. Therefore, the government is planning to face the Centre's action politically, even though it cannot question it legally.

As per law, the state can borrow Rs 32,440 crores. It can borrow Rs 22,000 crores even if the non-budgetary loan liabilities are calculated as per the provisions made by the Central Government in advance. However, the state got approval to borrow only Rs 15390 crore rupees. The Centre has not yet given any specific reason for slashing the borrowing limit. The state hopes it will soon receive an explanation from the Centre in this regard. The finance department has clarified that it will take further action after receiving the explanation.