THIRUVANANTHAPURAM: The cabinet that convened here Wednesday decided to submit a memorandum to the Prime Minister on the central-state financial issues. The memorandum given will be on the deviations from the constitutional provisions and important central-state financial issues.

The central government will be asked to restore the state government's borrowing limit to its pre-2017 level. Including this, important problems faced by the state which are inconsistent with the federal principles will be brought to the attention of the Prime Minister as memorandum. The central government had in 2017 decided to include the amount set aside in the public account in the state's public debt while calculating the state's borrowing limit. This was a misinterpretation of Article 293 (3) of the Constitution.

Accordingly, the central government has stipulated that the loans repaid by the state public sector companies, corporations and special purpose institutions through the state budget or through the state tax/cess/ any form of state revenue earmarked for them shall be treated as debt taken by the state while issuing the Consent to Borrow under Article 293 (3).

The loans taken on government guarantees by public sector undertakings under the government are not direct liabilities of the state government. They can only be considered as contingent liability of the state. All borrowings taken by some special purpose institutions under the state government like KIIFB and KSSPL etc are now included in the public debt of the state government by the central government. However, it does not apply to loans taken by central government public sector undertakings and similar institutions. This act is a violation of the principles of federalism and hinders the development of the state.

It is in this context that the central government is requested to review the decision to include all the provisions in the public accounts and the loans taken by the state government-controlled institutions in determining the self-borrowing limit of the state government and restore the status quo before 2017.

Cabinet’s other decisions
A decision has been taken to grant financial assistance to the legal heirs of Binu Soman, who drowned in Manimalayar during a mock exercise held on December 29 at Kallooppara village in Pathanamthitta. Rs 4 lakh will be allocated from the state disaster response fund.

The government decided to re-appoint K Dinesh Kumar, who has completed three years of service as Kasargod district government pleader and public prosecutor, till 29.05.2024.