With the financial year coming to a close this month, Kerala’s state treasury is under intense pressure. Reports suggest that treasury officials have been informally instructed to prioritise only salaries and pensions, while other payments might have to wait. Kerala needs around ₹24,000 crore to get through March, but where that money will come from is still uncertain.
The government is set to borrow ₹605 crore from the open market on March 13. But it’s just a fraction of what’s required. The bigger question remains: How will the remaining funds be arranged?
To fill the gap, Kerala has reportedly approached the central government for permission to borrow an additional ₹12,000 crore. Chief Minister Pinarayi Vijayan is expected to raise this issue during a meeting with Union Finance Minister Nirmala Sitharaman on March 12. It’s not just about this loan, though. The state also wants financial support for projects like the Vizhinjam port and the Mundakkai-Chooralmala rehabilitation programme.
There’s also a specific concern regarding Wayanad. The Centre has approved an interest-free loan of ₹529 crore for rehabilitation in the district, but with a strict condition—it must be used before March 31. Kerala finds this deadline impractical and intends to request more flexibility.
The state government argues that it is entitled to borrow ₹12,000 crore, partly due to power sector reforms and other allocations. But it also claims that the Centre is dragging its feet on granting permission—just like last year. The final chances to issue bonds fall on March 18 and 25. If the Centre doesn’t approve the request soon, the delay could make borrowing ineffective.
Last time, Kerala received permission for a ₹13,500 crore loan only after the Supreme Court stepped in. If the Centre holds back approval this year, some reports suggest that the state treasury might even have to temporarily halt operations.
