To commence borrowing on July 26 at Rs1000 cr
By CL Jose
THIRUVANANTHAPURAM/July 06-2022: Having languished during the whole of the first quarter – from April 1 to June 30 – with a single borrowing to the tune of Rs1500 crore on May 31, Kerala has entered the second quarter (Q2) with a mandate to borrow Rs9000 crore.
As per the open market borrowings calendar released by the Reserve Bank of India (RBI) for Q2, Kerala has been entitled to borrow Rs9000 crore by issuing bonds or state development loans (SDLs) in seven tranches starting from July 26 and ending on September 27.
The Finance Minister KN Balagopl has alread sounded concern about the state of Kerala’s finances. The Rs5693 crore GST compensation dues came in towards May end has helped compensate for the lost borrowing opportunities during Q1 to a good extent.
In fact, the first quarter (Q1) market borrowing calendar had originally mandated Kerala to borrow Rs9000 crore, but a purported stand-off with the Centre reportedly due to a ‘messy’ off-budget debt pile threw the proverbial spanner in the works.
Kerala’s Q1 borrowing at Rs1500 cr
The burgeoning off-budget borrowings especially those piled up through the duo, Kerala Infrastructure Investment Funds Board (KIIFB) and Kerala Social Security Pension Ltd (KSSPL), which alone is rumoured to be in the region of Rs60,000 crore, may have prompted the Centre to thwart the state’s borrowing plan in the first quarter.
Comptroller & Auditor General (CAG) of India has not been sympathetic about the way Kerala has been borrowing for the revenue expenditure, and many a time it has castigated the state for spending too little on capital expenditure.
Kerala Government and CAG have long been at loggerheads with regard to KIIFB, especially on the question regarding who should audit its accounts.
The state’s total borrowings as of March 31, 2022 have been pegged at Rs3.32 lakh crore, which the so-called ‘detractors’ dub as unsustainable given the state’s poor revenue history.
It was not Kerala alone that was restrained from borrowing during the first quarter. During April, the first month in Q1, only three states, Punjab, Andhra Pradesh and Maharashtra were able to go ahead with their open market borrowing.
AP 2nd largest borrower in Q1
While Kerala remained one of the lowest borrowers during Q1 with a one time borrowing at Rs1500 crore, the top borrower was Maharashtra at Rs30,000 crore, whereas Andhra Pradesh emerged as the new ‘dark horse’ with its borrowings totalling Rs 21,890 crore during the Q1 alone. In all, 18 states borrowed Rs1,09,240 crore during the first quarter.
