Lok Sabha Question No. 2569 (UNSTARRED), answered on 2026-03-09
Subject: Kerala Fiscal Capacity
Ministry: FINANCE
Asked by: Shri K C Venugopal

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF EXPENDITURE

## LOK SABHA

## UNSTARRED QUESTION NO. 2569

## TO BE ANSWERED ON MONDAY, 9 th  MARCH, 2026 PHALGUNA 18, 1947 (SAKA)

## KERALA FISCAL CAPACITY

## 2569.   Shri K C Venugopal

Will the Minister of Finance be pleased to state:

- (a) whether the Government has reduced Kerala's borrowing limit, if so, the details thereof, including reasons for retrospective cuts since 2021-22;
- (b) the status of Kerala's requests for a 'Special Fiscal Correction Package';
- (c) whether  similar  fiscal  curbs  have  been  imposed  on  other  States  since  2020,  if  so,  the details thereof, State-wise; and
- (d) the steps being taken by the Government to address Kerala's grievances on declining tax share under the 15th Finance Commission and GST 2.0 revenue losses;

## ANSWER

## MINISTER OF STATE IN THE MINISTRY OF FINANCE

## (SHRI PANKAJ CHAUDHARY)

(a) to (c) The Union Government applies a common yardstick and generally follows the fiscal limits  mandated  by  the  accepted  recommendations  of  the  Finance  Commission  while exercising the power to approve borrowings by State Governments under Article 293(3) of the Constitution of India. Based on recommendations of the 15th Finance Commission (XVFC), the annual Net Borrowing Ceiling (NBC) of all States including Kerala has been fixed at 3  percent  of  the  Gross  State  Domestic  Product  (GSDP)  for  financial  year  2025-26. Accordingly,  the  request  of  the  Government  of  Kerala  received  vide  memorandum  dated 09.10.2025 could not be considered.

Adjustments for the over-borrowing by States during previous year, if any, are made in  the  borrowing  ceiling  of  subsequent  year.  To  prevent  circumvention  of  debt  limits  and promote transparency in reporting fiscal deficit, from the financial year 2021-22 onwards, the off-budget borrowings (OBBs) raised by States through the States Owned Entities are also treated as borrowings of the State Governments while granting consent for borrowing under Article 293(3) of the Constitution of India. The State-wise details of deduction made from the borrowing  ceiling  on  account  of  over-utilization  of  borrowing  space  and  OBBs  from  FY 2021-22 to 2025-26 is given in the Annexure .

(d) The inter se share of States in tax devolution is recommended by the Finance Commission based  on  criteria  such  as  population,  income  distance,  area  and  demographic performance, with  weights  assigned  to  each  parameter.  Accordingly,  the  share  of  individual  States  may vary  across  different  Finance  Commission  periods.  Regarding  GST  2.0  revenue  losses,  no assessment of losses has been made by the Government so far.

## Annexure referred to in the answer of part (a) to (c) Lok Sabha Unstarred question no. 2569 for reply on 09.03.2026

State-wise details of deduction made from the borrowing ceiling on account of overutilization of borrowing space and Off-Budget Borrowings from FY 2021-22 to 2025-26

(Rs. in crore)

| Sl. No.   | State             | Deduction made for over-utilization of borrowing space   | Deduction under OBBs   |
|-----------|-------------------|----------------------------------------------------------|------------------------|
| 1         | Andhra Pradesh    | 28,037                                                   | 8,877                  |
| 2         | Arunachal Pradesh | 25                                                       | -                      |
| 3         | Assam             | -                                                        | 2,735                  |
| 4         | Bihar             | 3,302                                                    | 1,260                  |
| 5         | Chhattisgarh      | -                                                        | 3,625                  |
| 6         | Goa               | -                                                        | 77                     |
| 7         | Gujarat           | -                                                        | -                      |
| 8         | Haryana           | -                                                        | 43                     |
| 9         | Himachal Pradesh  | 1,110                                                    | -                      |
| 10        | Jharkhand         | -                                                        | -                      |
| 11        | Karnataka         | -                                                        | 11,817                 |
| 12        | Kerala            | 26,531                                                   | 31,114                 |
| 13        | Madhya Pradesh    | 6,493                                                    | 3,732                  |
| 14        | Maharashtra       | -                                                        | 52,830                 |
| 15        | Manipur           | 451                                                      | 640                    |
| 16        | Meghalaya         | 1,254                                                    | 92                     |
| 17        | Mizoram           | -                                                        | -                      |
| 18        | Nagaland          | -                                                        | 39                     |
| 19        | Odisha            | -                                                        | -                      |
| 20        | Punjab            | 2,625                                                    | 3,206                  |
| 21        | Rajasthan         | 20,475                                                   | 8,043                  |
| 22        | Sikkim            | 324                                                      | 575                    |
| 23        | Tamil Nadu        | 3,093                                                    | 3,812                  |
| 24        | Telangana         | 9,950                                                    | 48,375                 |
| 25        | Tripura           | 1,706                                                    | -                      |
| 26        | Uttar Pradesh     | -                                                        | 7,439                  |
| 27        | Uttarakhand       | -                                                        | 70                     |
| 28        | West Bengal       | -                                                        | 1,089                  |
|           | Total amount      | 1,05,376                                                 | 1,89,490               |

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