Representative image of Indian rupees.
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Thiruvananthapuram: The financial crisis of Kerala could aggravate further as the Centre has reportedly slashed the borrowing limit for the last quarter of the current fiscal by around Rs. 5,600 crore.
While the state was expecting a borrowing limit of Rs. 7,437.61 crore for the last quarter, the Centre set the borrowing limit to Rs. 1,838 crore.
State government sources said that the drastic slash in borrowing limit would aggravate the state's financial crisis and could further affect payment of social welfare pensions. Already pension of Rs. 1,600 each to over 60 lakh people could not be paid for the last five months.
The key reasons for slashing state's borrowing limit was considering public funds in state treasury as well as borrowings by the Kerala Infrastructure Investment Fund Board (KIIFB) as state's borrowings. Even as the state government repeatedly objected to it, the Centre has not yet relaxed the norm.
The Left Front government in Kerala had been alleging that the cut in borrowing limits was aimed at scuttling development activities of the state government when the Lok Sabha polls are approaching. The Centre is also giving massive publicity to Central government-funded schemes in Kerala.