State development at risk: RBI caps government loan guarantees, Kerala faces budget cut

THIRUVANANTHAPURAM: The Reserve Bank's restriction on government loan guarantees, affecting institutions like KIFBII, will hamper state development. The annual limit for Kerala is now Rs 5,000 crore. The decision, based on a central government working group report applies to all states.

States can't guarantee over 80% of loan amounts, with a limit of 5% of gross revenue or 0.5% of GDP annually. KSRTC's loan from KTDFC guaranteed by the government, raised concerns about non-repayment consequences. The RBI aims to prevent such issues.

States collectively owe 7.40 lakh crores, impacting welfare pensions and public institutions like KSEB, KSRTC. Central government borrowing limits were cut to control escalating state debts.

Key loans under government guarantee:

- KSFE: 12,974 crores

- Cooperative Agriculture and Rural Development Bank: 5,830 crores

- KSRTC: 3,178 crores

- Urban and Rural Development Finance Corporation: 3,054 crores

- Kochi Metro: 1,110 crores

- Social Security Pension Ltd: 1,773 crores

- KTDFC: 832 crores

- KIFBI: 550 crores

- Development of Backward Classes Corporation: 1,078 crores

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