Lok Sabha Question No. 3461 (UNSTARRED), answered on 2021-12-20
Subject: Financial Assistance Sought by Kerala
Ministry: FINANCE
Asked by: Kumbakudi Sudhakaran

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF EXPENDITURE

## LOK SABHA UNSTARRED QUESTION NO.  3461 TO BE ANSWERED ON MONDAY, 20 TH  DECEMBER, 2021 29 AGRAHAYANA, 1943 (SAKA)

## Financial Assistance Sought by Kerala

## 3461. SHRI KUMBAKUDI SUDHAKARAN:

Will the Minister of FINANCE be pleased to state:

- a) the number of times, the State Government of Kerala has written representations to the Union Government seeking financial assistance since 2016;
- b) the  year-wise  details  along  with  the  specific  issues  for  which  the  financial  assistance  was sought for; and
- c) the number of times, the Union Government has accepted the request of Kerala's demand for financial assistance, year-wise and topic-wise?

## ANSWER

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

(a) & (b) During the year 2019-20, State Government of Kerala requested for enhancement of the prescribed borrowing limit of 3% of Gross State Domestic Product (GSDP) to 4.5% of GSDP and  keeping  external  borrowing  from  multilateral  and  bilateral  agencies  outside  the  State's borrowing  limit.  During  the  year  2020-21  also,  the  State  Government  of  Kerala  requested  for enhancement of the prescribed borrowing limit of 3% of Gross State Domestic Product (GSDP), extension  of  enhanced  limit  of  Ways  and  Means  Advances  (WMA)  and  assistance  under  the 'Scheme  for  Special  Assistance  to  States  for  Capital    Expenditure'.  Thereafter,  during  the  year 2021-22 too, State Government of Kerala requested to allow the net borrowing ceiling of 5 percent of GSDP without any condition, to continue the enhanced limit of Ways and Means Advances at least till the end of the financial year 2021-22, Rs. 2,412 crore as sector-specific grant and Rs. 1,100 crore as State Specific Grants to State of Kerala.

(c) In 2019-20, the Government of India allowed the States  additional borrowing  as onetime special dispensation, beyond state's eligibility on account of lower tax devolution during 2019-20. State of Kerala was allowed additional borrowing of Rs. 1,471 crore under this special dispensation.  Based  on  the  requests  received  from  the  States  including  State  of  Kerala,  Union Government had approved additional borrowing limit of up to 2 percent of GSDP over and above normal borrowing limit of 3% of GSDP of the States for the year 2020-21. Out of this 2 percent, additional borrowing permission of Rs. 18,087 crore was allowed to the State of Kerala during the year 2020-21.   Besides this, special assistance of Rs. 81.50 crore in the form of 50 year interest free loan  was  also  released  to  Kerala  under  the  'Scheme  for  Special  Assistance  to  States  for  Capital Expenditure' during 2020-21.

During  the  year  2021-22,  based  on  the  recommendation  of  the  15 th Finance  Commission (XV-FC), the normal net borrowing ceiling (NBC) of the States have been fixed at 4 percent of Gross  State  Domestic  Product  (GSDP).  In  addition,  States,  including  State  of  Kerala  are  also allowed  to  avail  additional  borrowing  of  up  to  0.50%  of  GSDP  based  on  certain  performance criteria in power sector.  Further, Reserve Bank of India has extended the existing enhanced limit of WMA for all States including State of Kerala up to March 31, 2022.

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