NEW DELHI: Kerala has told the Centre that reduction in borrowing limit has backfired and the state should allow one percent more borrowing ad hoc in the face of severe economic crisis.

In a meeting with Union Finance Minister Nirmala Sitharaman, Finance Minister KN Balagopal demanded an end to discrimination, including in the allocation of tax share, and immediate release of arrears of health grant and UGC salary.

Balagopal told the Union Minister that Kerala is facing severe financial difficulties in the financial year 2023-24. 8,400 crore in revenue deficit grant, Rs 12,000 crore in GST compensation and Rs 8,000 crore through reduction in borrowing limit.

Balagopal also pointed out that during the 10th Finance Commission, the tax share was 3.87 percent, which decreased to 1.92 percent during the 15th Finance Commission. Due to low population and growth, Kerala suffered a setback in receiving central aid. The economic crisis is dampening the state's prospects for growth. In this case, an ad-hoc borrowing of one percent above the limit should be allowed for the financial year 2023-24. Balagopal also reiterated the demand for continuation of GST compensation.

It also demanded immediate payment of arrears of Rs 371.36 crore for health grant, Rs 750.93 crore for UGC salary revision and Rs 521.95 crore for implementation of social schemes.