Kerala to Avail Advance Loans of Rs 1,500 Crores to Alleviate Financial Crisis

In response to the severe financial crisis in Kerala, the state government has decided to acquire loans in advance. Loans originally intended for the following year will be availed this month, with loan documents totaling Rs 1,500 crores set to be auctioned on November 28.

The central government had set a borrowing limit of Rs 21,800 crores for Kerala until December this year. Currently, only Rs 52 crores remain to be borrowed out of this allocation. Recognizing the challenging financial situation in the state, the central government has agreed to grant loans well in advance.

The state government had initially requested a loan of Rs 2,000 crores, and the central government approved an amount of Rs 1,500 crores, which will be availed on November 28. In addition to this, Kerala is reportedly considering availing more loans totaling Rs 32,700 crores between December 2023 and March 2024.

It is noteworthy that the state is also anticipating an additional financial aid of Rs 4,500 crores from the central government, specifically for the reforms introduced in the power sector. Typically, states are allocated loans equivalent to three percent of their total domestic production by the central government. However, Kerala has requested a higher allocation of loans, amounting to four percent of its total domestic production rates. The state has also sought the exclusion of the Rs 5,550 crores allocated for land acquisition for national highways via KIFBI from the borrowing limits. The central government’s response to these requests is awaited.

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