Amid the row over Kerala’s slashed open market borrowing (OMB) limit, former Finance Minister T.M. Thomas Isaac has said that the State would approach the Supreme Court against the Centre’s decision.
In a Facebook post, he described such a move as an essential step and that the State’s fiscal rights have now emerged as an important political question. Dr. Isaac’s remarks have come on the heels of the Centre reportedly informing the State this week that its borrowing limit for 2023-24 is pegged at ₹20,521.33 crore, less than the State’s projections.
3% of GSDP
Dr. Isaac pointed out that Kerala is eligible to raise an amount equivalent to 3% of the GSDP as OMB. ‘‘But now the Centre is saying that Kerala is eligible for only 2%. The pertinent question is whether the Central government has the right to reduce the borrowing limit,’‘ Dr. Isaac said.
Double standard
Even if borrowings of the Kerala Infrastructure Investment Fund Board (KIIFB) are considered to be off-Budgetary in nature, it cannot be termed part of the State’s debt since the Centre does not follow this principle, the former Finance Minister said. Off-Budget borrowings made by the Centre are not included in its overall debt or fiscal deficit. This double standard is intended to upset the State’s development, he alleged.
The State’s OMB limit for the current fiscal had kicked up a row in May with the Centre fixing the limit for the first nine months at ₹15,390 crore, less than what the State expected. The State had since then asked the Centre to issue the calculation sheet detailing the break-up for the entire fiscal.
