Kerala seeks ‘extra borrowing limit’

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.