Kerala government to petition PM on major central-state financial issues
Jan 05, 2023
Thiruvananthapuram (Kerala) [India], January 5 : Kerala government has decided to submit a petition to the Prime Minister on major central and state financial issues.
The decision was taken in the cabinet meeting on Wednesday. The petition is based on issues related to deviations from constitutional provisions. The important Central and State financial issues will be addressed in the letter.
According to the press-release of Chief Minister's Office (CMO), the state government plans to ask the central government to restore the state government's borrowing limit to its pre-2017 status. Important issues facing the state which are not in line with federal principles will be brought to the attention of the Prime Minister in the form of a petition.
In 2017, the central government decided to include the amount set aside in the public account in the state's public debt while calculating the state's self-borrowing limit. This was a misinterpretation of Article 293(3) of the Constitution, as per the statement of the CMO.
Accordingly, the central government has stipulated that the loans repaid by the state public sector companies-corporations and special purpose entities through the state budget or through the state tax/cess/any form of state revenue earmarked for them shall be considered as debt taken by the state while issuing consent letter for borrowing under Article 293(3) as per the release.
Loans taken by Public Sector Undertakings under the State Government on the back of Government Guarantees are not direct liabilities of the State Government. They can only be considered contingent liabilities of the state. Some Special Purpose Institutions under the State Government like KIFBI and KSSP. All borrowings are now included in the public debt of the State Government by the Central Government. But it is not applicable to loans taken by the Central Government Public Sector Undertakings and similar institutions.
This act is a violation of federal principles and is a hindrance to the development of the state as mentioned in the CMO's press release.
In this context, the state has requested the central government to re-examine the decision to include reserves and loans taken by state government-controlled entities in setting the state government's borrowing limit and restoring the pre-2017 status quo.
