The Communist Party of India (Marxist)-led Kerala government will be borrowing Rs 2,500 crore from the open market to meet its expenses for the Onam festival. The state government will need to pay salaries and pension besides making ad hoc payments.
Malayalam daily Mathrubhumi reported that the state government would need Rs 7,000 crore to pay salaries and pension during Onam and it would be borrowing Rs 1,000 crore this month. The money will be raised through debentures issued by the Reserve Bank of India that will be auctioned Tuesday (7 August). The borrowed money will be paid over a period of 10 years.
Last year, NITI Aayog, in a report on Kerala’s finances, said that its Debt-GDP (gross domestic product) ratio is the third highest among comparable states after Andhra Pradesh and Rajasthan. It said while neighbouring states like Tamil Nadu and Karnataka were able to control the debt to below 20 per cent of their GDP, it was 32 per cent for Kerala, a level far higher than the 25 per cent recommended by the 14th Finance Commission. Kerala’s interest payment, too, was far higher at 20.2 per cent compared to the revenue it generates, second only to Gujarat’s 20.8 per cent.
The Comptroller and Audit General report, tabled in Kerala Assembly in June, criticised the state’s financial status, saying that its fiscal deficit was higher at four per cent compared to the three per cent ceiling fixed by the 14th Finance Commission. It pointed out that interest payments cut 16 per cent of revenue receipts, while payment of pension took away 20 per cent.
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