Kerala Chief Minister Pinarayi Vijayan criticized the central government for impeding the state’s financial independence and hindering its development efforts. Vijayan highlighted that Kerala has faced obstacles in capital expenditure for the past five years, mainly due to the retroactive reduction of the state’s borrowing limit starting from 2021-22 by considering KIIFB loans as part of the state’s debt.
Vijayan emphasized that the Reserve Bank of India’s distinction between guarantees and loans since 1999 contrasts with the central government’s treatment of Kerala’s borrowing limit. He described the practice of counting KIIFB guarantees as state debt as flawed, resulting in a substantial reduction in the state’s borrowing capacity.
Despite Kerala’s fiscal achievements, with net tax revenue rising from Rs 47,000 crore in March 2021 to nearly Rs 80,000 crore presently, Vijayan criticized the central government’s actions. These actions, including reduced borrowing limits, delayed approvals, and cuts to IGST settlements, have hampered the state’s advancement.
Vijayan also highlighted the adverse effects of international trade restrictions, particularly U.S. import controls, impacting Kerala’s key exports like seafood, spices, cashew, and textiles, leading to annual losses of approximately Rs 2,500 crore. He expressed concern over the arbitrary reduction in allocations, such as a Rs 14,358 crore cut from Kerala’s borrowing limit for 2025-26, weakening the state’s fiscal capacity.
The Chief Minister condemned the central government for misusing Article 293(3) of the Constitution and including funds raised by KIIFB and the Social Security Pension Limited as part of the state’s debt. He viewed these actions as politically driven and detrimental to Kerala’s development model. Despite challenges, Vijayan affirmed Kerala’s commitment to pursuing its development goals without allowing central interventions to derail progress.
