Thiruvananthapuram, 02 September (H.S.): Chief Minister V.D. Satheesan defended the Kerala government's borrowing, arguing that no government could function without raising loans and rejecting allegations that his administration had exceeded borrowing limits.

Addressing a press conference, Satheesan said the previous Left government, and not the UDF administration, had resorted to borrowing beyond limits. He asked how the government could secure loans above the ceiling when borrowing was regulated through limits fixed by the Centre.

The Chief Minister said the former government had raised crores of rupees through off-budget borrowings. The administration had inherited liabilities of ₹38,000 crore arising from loans taken through the Kerala Infrastructure Investment Fund Board, besides debts accumulated during the previous government's tenure.

Satheesan said his government was confronting a sharp decline in financial assistance from the Centre. The 15th Finance Commission had provided the previous government with ₹55,000 crore as revenue deficit grants, but no comparable support was available to the present administration.

According to him, the 16th Finance Commission had indicated that Kerala would not receive a revenue deficit grant. He alleged that the finance minister had prepared the State Budget on the assumption that such assistance would continue.

The Chief Minister further said Kerala's share of tax devolution had fallen, resulting in a reduction of ₹5,000 crore. Overall, the State was expected to receive nearly ₹20,000 crore less from the Centre than the amount projected by the previous finance minister.

Satheesan pointed out that Kerala's borrowing ceiling stood at 3.5 per cent during the previous government's tenure but had been reduced to three per cent under the UDF government. In such circumstances, accusing the administration of borrowing beyond the permitted limit was misleading, he said, adding that the government was managing inherited liabilities amid reduced central support, sustaining welfare programmes and meeting essential development needs across Kerala.

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Hindusthan Samachar / Arun Lakshman