Uncertainty Ends; After Centre's Nod, Kerala Raises Rs 7,139 Crore Through Extra Borrowing
Thiruvananthapuram, Kerala: After days of uncertainty, the Centre gave its nod to Kerala for additional borrowing on Monday evening. Following the development, the state raised Rs 7,139 crore from the market on Tuesday, helping the treasury to stand stable from the forthcoming financial crisis.
The government was preparing to impose treasury controls as the Union Government delayed granting approval for the additional borrowing. However, the state managed to mobilise a total of Rs 7,139 crore through the auction of state government securities (SGS) of different maturities after the Centre’s nod.
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The state was hoping that the Centre might give the nod for additional borrowing, given the eligibility of the state for the same. As part of power sector reforms, the Centre usually permits states to borrow an additional 0.5% of their Gross State Domestic Product (GSDP).
Kerala was eligible for additional borrowing of up to 0.5% of its GSDP for power sector reforms, and the state had availed such loans in the previous years. The Finance Department had anticipated approval by Friday. The office of Union Finance Minister Nirmala Sitharaman conveyed to the Resident Commissioner of Kerala in Delhi to allow additional borrowings on Monday evening, allowing the state to raise funds immediately.
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Kerala collected Rs 990 crore through SGS-40 (bonds maturing in 2040), Rs 3,000 crore through SGS-43, and Rs 3,149 crore through the auction of SGS-55 securities, according to the Reserve Bank of India (RBI) website.
Earlier, Kerala had told the Centre that it was eligible to raise Rs 12,000 crore in loans after December, and out of this, Rs 5,990 crore has already been approved and utilised. Notably, the state has borrowed Rs 47,517 crore from the open market this financial year.
