Lok Sabha Question No. 815 (UNSTARRED), answered on 2022-12-12
Subject: Off-Budget Borrowing by KIIFB
Ministry: FINANCE
Asked by: Shashi Tharoor

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF EXPENDITURE

## LOK SABHA UNSTARRED QUESTION NO.  815 TO BE ANSWERED ON MONDAY, 12 th  DECEMBER, 2022 21 AGRAHAYANA, 1944 (SAKA)

## Off-Budget Borrowing by KIIFB

## 815. DR. SHASHI THAROOR:

Will the Minister of FINANCE be pleased to state:

- (a) whether the off-budget borrowings by Kerala Social Security Pension Limited (KSSPL) and Kerala  Infrastructure  Investment  Fund  Board  (KIIFB)  have  been  included  under  Kerala State's net borrowing limit and if so, the details thereof and if not, the reasons therefor;
- (b) whether any objection has been raised by the Kerala Government in this regard and if so, the details thereof;
- (c) whether the Government has, pending finality on the above matter, received a request from the Kerala Government to compute the off-budget borrowings by KSSPL and KIIFB on a net borrowing basis rather than a gross borrowing basis and if so, the details thereof; and
- (d) whether the unutilised  portion  of  open  market  borrowing  limit  of  the  Kerala  Government amounting to Rs. 1,619 crore during the Financial Year 2021-22 has not been added to the quota  for  the  present  Financial  Year  and  if  so,  the  details  thereof  and  if  not,  the  reasons therefor?

## ANSWER

## MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI PANKAJ CHAUDHARY)

(a) to (c) Yes Sir, State of Kerala has declared gross borrowings of Rs. 14,312.80 crore during financial year  2021-22  by Kerala Social Security Pension Limited  (KSSPL)  and  Kerala Infrastructure Investment Fund Board (KIIFB), where principal and/or interest are to be serviced out  of  the  State  Budgets  and/or  by  assignment  of  taxes/cess  or  any  other  State's  revenue.  This information was submitted by the State Government along with their request for obtaining consent of Government of India for borrowings of FY 2022-23 under Article 293(3) of the Constitution of India.

Considering  the  effect  of  bypassing  the  Net  Borrowing  Ceiling  (NBC)  through  such borrowings by some States, as pointed out by the Comptroller & Auditor General, it was decided and  communicated  to  the  States  in  March  2022  that  borrowings  by  State  Public  Sector companies/corporations, Special purpose vehicles (SPVs) and other equivalent instruments, where principal  and/or  interest  are  to  be  serviced  out  of  the  State  Budgets  and/or  by  assignment  of taxes/cess or any other State's revenue, shall be considered as Borrowings made by the State itself for the purpose of issuing the consent under Article 293(3) of the Constitution of India.

In this regard, State of Kerala, inter-alia, requested to exclude the borrowings of State Government  entities  in  determining  the  Net  Borrowing  Ceiling  of  the  States.  The  State  also requested to consider off-budget borrowing on a net borrowing basis rather than gross borrowing basis and accordingly, allow replacement borrowing for repayment of such borrowings.

In view of magnitude of such borrowings and difficulties expressed by some States, the adjustment for off-budget borrowing done by the States in 2021-22 was spread across upto four remaining  financial  years  of  15 th Finance  Commission  award  period  (2022-23  to  2025-26). Further, replacement borrowing of Rs. 1,750 crore for repayment of off-budget borrowing which has been raised on or after 01.04.2021 has been allowed to the State of Kerala. Accordingly, only Rs.  3,140.70  crore,  being  one-fourth  of  net  off-budget  borrowing  of  Rs.12,562.80  crore  for  the year 2021-22 has been deducted from the borrowing limit of State of Kerala during the FY 202223.

(d) No Sir, State of Kerala has raised Open Market Borrowing (OMB) of Rs. 27,000 crore as against the allowed OMB limit of Rs. 28,619 crore for the year 2021-22. The unutilized portion of  OMB limit for  the year  2021-22,  amounting  to  Rs.  1,619  crore  has  already  been  considered while assessing the borrowing space of the State for the FY 2022-23.

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