Pre-Budget Meeting: Kerala, Tamil Nadu Request For Increase In States' Borrowing Limit

Finance ministers of Kerala and Tamil Nadu requested for a higher borrowing ceiling during the pre-budget meeting chaired by Nirmala Sitharaman on Saturday. The Union finance minister met her state counterparts as part of the pre-Budget consultation in Delhi.

Kerala Finance Minister KN Balagopal asked for a 0.5 percentage points increase in the borrowing limit. The Central government allows the state to borrow up to 3% of their gross state domestic product and the minister has requested the limit to be increased to 3.5% of the GSDP unconditionally for the current financial year.

Removal of restrictions on the Open Market borrowing of the state, has also been requested in the light of financial constrains that the state is facing.

Thangam Thenarasu, Finance Minster of Tamil Nadu, in his pre-budget speech also included requests regarding increasing borrowing limits. He alleged that the state GDP of Tamil Nadu is being under-estimated, which has led to a loss of Rs 8,500 crore in the last four years

Restrictions on open market borrowing of the state was placed in 2023, like the inclusion of its Public Account Accrual and borrowings of State-owned enterprises in the open market borrowing limits.

Balagopal said that there is ‘undue liquidity stress’ that is caused by the additional restrictions and reductions in the open market borrowing limit.

He said that the setbacks continue to be beyond the ability of the state government despite the efforts and measures to improve the state’s struggling finances.

The Kerala finance minister also requested a special package of Rs 24,000 crore over two years to overcome the liquidity stress that is faced by the state. He also asked for a special investment of Rs 5,000 crore for Vizhinjam Port development, and another Rs 5,000 crore for Calicut-Wayanad tunnel road. The minister has also called for an early clearance of semi-high speed railway line, which would connect Thiruvananthapuram and Kasaragod.

Karnataka’s Finance Minister Krishna Byre Gowanda in a post on X, called for a fairer revenue sharing by asking for the inclusion of tax and surcharges into Divisible Pool.

The minister requested release of Rs 5,300 crore for the Upper Bhadra Water project, and Strategic Policy Grants of Rs 11,495 crore.

Gowda requested a special package for Bengaluru Development and for Kalyana Karnataka development, along with an increase in honorarium for Anganawadi, Asha and Mid Day Meal workers.