Kerala never indulged in reckless borrowing: Finance minister KN Balagopal

THIRUVANANTHAPURAM: Finance minister KN Balagopal dismissed allegations that Kerala’s financial crisis was the result of its indiscipline. Kerala never indulged in reckless borrowing and despite constraints, the state never defaulted on payback of its loan, he said on Monday.
“Centre also should show financial discipline. Kerala is not asking for any largesse; we are only asking Centre to let us borrow within the approved level. The Centre’s borrowing is 6.9% of its GDP. Kerala has borrowed only 3.4% of its GDP. This is 0.1% less than the approved level. I’m not sure whether any international agency has advised the Centre not to sanction borrowing permission to states,” he said.
“According to the national statistical office (NSO), the inflation rate is lowest in Kerala. Could the state have achieved this if it splurged its resources? Better public distribution system and excellent health and education facilities in Kerala are the proof of diligent spending of the state. Instead of encouraging a state like Kerala, Centre is trying to pester it,” the FM added.
Balagopal refused to divulge the details of the queries raised by the Centre on state’s borrowings. “Since official-level meetings are on, I cannot reveal any detail at present. The conditions Centre proposes for borrowings by states are strange and unacceptable. This has been conveyed to them,” he said.
However, he gave enough hints that Centre has taken a stand that the borrowings made by state public sector units, KIIFB and similar agencies should be considered as Kerala’s own borrowings. He said there was no logic in such arguments.
“Centre gives guarantee to loans taken by public sector units, including NHAI, then why does it say that states should stop doing the same,” he asked.
Balagopal said that many states have already announced protest programmes against Centre’s new stand on state borrowings. “We are not going to such an extent for the time being. We hope the issue will be sorted out soon through discussions,” he said.
Earlier, Centre had denied permission to the state for borrowings through the sale of state stocks through RBI. Following hectic discussions, Centre then gave conditional clearance to the state for borrowing Rs 5,000 crore.