On Thursday, 15 July 2021, K. N. Balagopal, the Finance Minister of the State of Kerala, met Nirmala Sitharaman, the Union Finance Minister. The meeting was a cordial one and was held in the national capital.On behalf of the State Government, he raised the demand to enhance the borrowing limit for GSDP (Gross State Domestic Product) to 5%, which initially was 3%.
Due to the ongoing pandemic, all the states are facing many problems, including severe economic crises. He demanded that she grant over Rs.4,500 crore GST(goods and services tax) compensation and extend its term for five more years from the Centre due to the State. He also mentioned that several other states like Telangana and Maharashtra had raised similar demands but did not receive any positive responses. Hence, Sitharaman has said, considering the needs and helping the State. She has also mentioned visiting the State after Onam for further discussions.
This enhanced borrowing limit would allow Kerala to borrow an additional amount of nearly Rs.18,087 crore. The borrowed fund can be used for any development projects, except Atma-Nirbhar Bharat. The State can use it to implement nationalized ration card schemes or bring in a randomized process for selecting factories for inspection. It can also be used for rationalizing electricity subsidies through DBT to farmers. These are the institutional reform measures. Since many borrowers that include the small-time traders are having problems due to the pandemic and are unable to make repayments or are facing harassment from entities that extended the loans. He urged that a moratorium should be announced on repayment of loans.