Kerala can breathe easy as Centre gives nod to avail loan up to Rs 5,000cr

Thiruvananthapuram: Ending a week-long suspense, the central government has finally allowed the Kerala government to take a loan up to Rs 5,000 crore.

The move is sure to give a temporary succour to the state government, which is now reeling under a financial crisis. The state government hopes to take the loan by next week.

Though the Centre has allowed the state to take loan, there is no change in its stance that the loan availed by the KIIFBI and other public sector units will be treated as loan taken by the Kerala government.

The state government is under the apprehension that the Centre may reduce to half the total loan taking capacity of the state which now stands at Rs 32,435 crore.

The final calculation on the loan amount taken by the state government through other agencies in the last two years is not yet over.

After assessing the total loan availed by the state, the Centre will inform the state of the final ceiling on the maximum amount to be taken as loan. Though there is a ban on availing of loans till then, an exemption has been given to the state to take loan as a temporary measure for finding a solution to the present financial crisis.

Minister says situation grave
Finance Minister KN Balagopal informed the Cabinet meeting the other day that the financial situation of the state was precariously poised.

According to him, all development works in the state would be hit if the Centre included the loan amount taken by the KIIFBI while fixing the total loan limit of the state government.

He told the Cabinet meeting that the government was struggling to find money for daily expenses.

Balagopal said that now the tax collection was lesser compared to other periods since it was the beginning of the financial year.

He also sought the intervention of the chief minister, saying that the central government had put the state under unnecessary pressure by delaying to the maximum a decision on granting permission for availing loan.

Centre-state tussle
The Centre has directed to account loans raised via the Kerala Infrastructure Investment Fund Board (KIIFB) and other public sector institutions in the state’s credit. The Comptroller and Auditor General, too, had suggested the inclusion of loans thus raised in state’s credit.

The state government, however, has been opposed to this suggestion. The Centre has also pointed out anomalies in the state’s loan statements.

Normally, States are allowed to raise loans through bonds in the beginning of the financial year itself. Kerala had made preparations to avail a loan of Rs 4,000 crore this month, but was pushed into a crisis with the Centre refusing approval.