The Kerala government has found itself in a tight spot with the Centre yet to give permission for market borrowings in the current fiscal.
It is understood that the Centre has adopted a tough stand on off-Budget borrowings made through various government institutions and wants those to be factored in into the State's borrowing limit. The Centre has also reportedly sought a clarification from the State government regarding previous borrowings.
Finance department sources said the State government has taken up the matter with the Centre at multiple levels.
It may be recalled that the Comptroller and Auditor General (CAG) had slammed the off-Budget borrowings made through the Kerala Infrastructure Investment Fund Board (KIIFB) and the Kerala Social Security Pension Ltd (KSSPL), and wanted the Kerala government to disclose their details in the Budget and accounts.
The Centre is understood to have taken a stand on similar lines that borrowings by public sector companies, corporations and special purpose vehicles – where the principal amount and/or interest are to be serviced out of State Budgets or through taxes and cesses or any other revenue of the State – will be treated as borrowings made by the State itself.
According to the indicative calendar of market borrowings published by the Reserve Bank of India (RBI) on April 5, Kerala is entitled to market borrowings in the first quarter of 2022-23 to the tune of ₹1,000 crore in April, a total of ₹5,000 crore in May and ₹3,000 crore in June.
Following financial crunch, the State government had already imposed regulations on the treasury. Towards April-end, the Finance department had issued orders placing restrictions on the treasury from clearing bills above ₹25 lakh. This restriction is still in place, the government sources said.
