Kerala seeks ‘extra borrowing limit’
Why it matters?
Kerala has sought supplementary grants and eligibility for a “temporary extra borrowing limit” of 0.5% of the Gross State Domestic product (GSDP) to help it absorb the losses arising from the GST slab rejig and the U.S. reciprocal tariffs.
What you should know?
Present borrowing limits of states:
15th finance commission: Recommended a limit of 3% of GSDP until the 2025-26 fiscal year.
Budget 2025: Raised the limit to 3.5% of GSDP.
Articles 293:
A State can borrow within the territory of India upon the security of the Consolidated Fund of the State within such limits, fixed by the Legislature of such State.
A State may not without the consent of the Government of India raise any loan if there is still outstanding any part of a loan which has been made to the State by the Government of India.