After rejecting Centre's offer in court, Kerala settles for lower loan amount of Rs 3000 cr

THIRUVANANTHAPURAM: Kerala, which rejected the Rs 5,000 crore loan sanction offered by the Centre in the Supreme Court, later decided to ask for it. To this, the Centre replied it is not possible and later allowed Rs 3000 crores after pressure from the state.

The Centre's position in the court was that it would be included in the borrowing limit for this financial year. Rs 3000 crore is being taken now by accepting the same condition that was rejected back then.

Kerala was on the assumption that the notification for credit limit for the new financial year would come soon and the state could avail loan accordingly as per the requirement. There was no notification even on April 9th and the state sought temporary permission to borrow the amount said in court.

This money may be used to pay an installment of DA dues of employees and to fund local bodies.

Kerala can borrow Rs 37,500 crore in the current year under the general provision of borrowing three percent of GDP. The Centre is likely to deduct the loan taken through KIIFB and pension company from this.

Fund for welfare pension lent by cooperative sector

1. Rs.1800 crores will be used to pay welfare pension from the Rs 2000 crore loan taken from the cooperative sector. The effort is to complete the distribution before Vishu.

The loan will be taken through a company set up by the government for welfare pension by forming a consortium of cooperative societies and banks. The interest rate is 9.1 percent.

2. In the investment mobilization campaign conducted earlier this year, about Rs 24,000 crores of new investment came in cooperative societies and banks. Loan was availed from this amount. Mannarkkad Rural Cooperative Bank is the fund manager.

The loan amount is transferred through a pool account opened in Kerala Bank by the co-operative society registrar and the fund manager bank.

3. This is the third time that the government has taken a loan from the cooperative banks. The loan is taken for a period of one year. The matured loan was not repaid. The term was extended by one more year by paying the interest.