Latest news with #GuaranteeRedemptionFund
The Hindu
04-07-2025
- Business
- The Hindu
State to enact legislation to mitigate man-animal conflict
The State government is moving ahead with steps to enact a legislation to mitigate the rising man-animal conflict in Kerala and a draft Bill is under consideration by the Law department, Chief Minister Pinarayi Vijayan has said. The Chief Minister announced this during a meeting of MPs held at the Thiruvananthapuram Government Guest House here on Friday, ahead of the monsoon session of the Parliament. The meeting also decided to take a united stand to get ₹2,221.1 crore for Meppadi and ₹98.10 crore for Vilangad in Kozhikode district, as per the Post-Disaster Need Assessment submitted to the Union government in connection with the rehabilitation of people of the landslide-hit Mundakkai-Chooralmala in Wayanad. The meeting also stressed the need to put up a joint intervention to restore Section 13 removed from the National Disaster Management Act. Similarly, the meeting decided to request an immediate amendment to the law that empowers State governments to provide relief in the matters stipulated in Section 11 of the Wildlife Protection Act, taking into account the local needs. Rail development The Chief Minister had earlier submitted a detailed memorandum regarding rail development in the State to the Union Railway Minister. As a follow-up to the memorandum, the Chief Minister requested the MPs to bring projects like the Thalassery-Wayanad-Mysuru rail line, Nilambur-Nanjangud rail project, Kanhangad-Panathur-Kaniyur railway line, Angamaly-Erumely-Sabari railway line, and the allocation of funds for the extension of the Kochi Metro from SN Junction to Thripunithura Metro Station to the attention of the Union government. Financial issues The meeting decided to make necessary interventions in financial issues such as cutting the borrowing limit of the State as per the provisions of the Guarantee Redemption Fund, cutting the Integrated Goods and Services Tax (IGST) by ₹965 crore, raising the State's borrowing limit to 3.5%, exempting loans taken by the Kerala Infrastructure Investment Fund Board (KIIFB) and Pension Company from the borrowing limit etc. The meeting also agreed to take steps to seek timely Central support in providing viability gap funds for setting up logistics parks and completing connectivity infrastructure. The delay in allocating the All India Institute of Medical Sciences (AIIMS) in Kerala, the demand to convert the post of Accredited Social Health Activists as health workers, maintaining the Brahmos project in the State, providing a 'point of call' status for foreign airlines to operate services from the Kannur airport, development of national highways in the State, upgrading the waterway from Kottapuram to Kozhikode, which has been declared as an extension of National Waterway-3, to national standards and the construction of seawalls for coastal protection were also discussed in the meeting. Along with the construction of a seawall, action should be taken on the various proposals submitted to the Union government to protect the lives and property of fishers on the Kerala coast. The meeting decided to jointly coordinate steps to be taken in allocating more food grains to the State under the tide-over allocation. The meeting also decided to register the State's protest against the proposed Indo-U.S. Free Trade Agreement (FTA) and tasked the Chief Minister to send a letter to the Prime Minister in this regard.
The Hindu
02-07-2025
- Business
- The Hindu
State to set up Guarantee Redemption Fund
The State Cabinet on Wednesday approved the plan to set up a Guarantee Redemption Fund (GRF). The Union government had proposed the setting up of the fund as a buffer to overcome the risks that may arise due to the guarantee provided by the States to the public sector undertakings. The investment in this fund has to be increased to 5% of the outstanding guarantee in 5 years. The guidelines issued by the Union Finance Ministry regarding borrowings for 2025-26 says that if the investment recommended by the Reserve Bank is not made in the GRF by April 1, 2025, an equivalent amount or 0.25% of the Gross State Domestic Product (GSDP), whichever is lower, will be deducted from the total borrowing limit of the State for 2025-26. This is the first time that the formation of GRF has been included in the criteria for fixing the borrowing limit of the states. As a State facing a revenue deficit, it would have been possible to invest in the GRF only through borrowals. The cabinet meeting decided to issue a notification to set up a GRF to avoid a reduction in the State's credit availability this financial year as per the new guidelines, said a press release from the Chief Minister's office.
The Hindu
03-06-2025
- Business
- The Hindu
Lift borrowing limit cuts after launching GRF, Kerala urges Centre
The Kerala government on Tuesday urged the Union Finance Ministry to reverse a ₹3,323-crore cut in its market borrowing limit. The government informed the Centre that it had taken steps to establish a Guarantee Redemption Fund (GRF) — a new requirement under the Union government's borrowing rules for States. After submitting a memorandum to Union Finance Minister Nirmala Sitharaman in New Delhi, Finance Minister K.N. Balagopal said the State had begun the process of constituting the GRF and would start contributing to it within the current financial year. Under revised guidelines issued by the Department of Expenditure for 2025–26, States must set aside either 0.25% of their Gross State Domestic Product (GSDP) or 5% of their outstanding guarantees — whichever is higher — in a GRF. If they fail to do so, the shortfall is deducted from their annual borrowing limit. For Kerala, this has resulted in a reduction of ₹3,323 crore from its approved borrowing ceiling for the first three quarters of the fiscal year. This deduction be reversed once the State formally notifies the GRF, Mr. Balagopal said. 'The government is in the process of establishing the fund. Contributions will begin this year,' he assured in the memorandum, calling the move essential to 'safeguard the financial stability and development trajectory of the State.' Kerala, a revenue-deficit State with high public welfare spending, has faced growing pressure on its finances. The borrowing limit — or net borrowing ceiling — is a critical tool for the State to raise funds through open market operations and meet development needs, Mr. Balagopal said. In addition to the GRF issue, the State has also sought the Centre's reconsideration on an earlier ₹1,877.57-crore deduction. This amount was permitted as additional borrowing in 2023-24 due to changes in GSDP estimates but was later adjusted against the 2024–25 borrowing limit — even though final GSDP figures for that year have not been released. Mr. Balagopal has requested that the adjustment be shifted to 2025–26 in light of more recent, upward GSDP revisions for 2022–23 and 2023–24. The Finance Minister called for 'kind and expeditious intervention' from the Union government to address these matters and help ensure the State's fiscal balance.
The Hindu
21-05-2025
- Business
- The Hindu
₹956.16 cr. cut from Kerala's IGST share, says Finance dept.
Systemic issues in the Integrated Goods and Services Tax (IGST) settlement mechanism has cost Kerala ₹956.16 crore, according to the Finance department. Finance Minister K.N. Balagopal said here on Wednesday that the Centre slashed IGST shares of all States on the grounds that excess amounts had been credited to them. Under this decision, Kerala's IGST share was reduced by ₹956.16 crore. However, there was a lack of clarity regarding the excess settlements, he said. Levied on the interstate supply of goods and services, IGST is collected by the Centre. The accounts are settled periodically and the revenue is shared between the Centre and the States. In July 2024, the Kerala Public Expenditure Review Committee had advised the Kerala government to closely monitor IGST inflow as the present system resulted in revenue loss for it. Talking to reporters here, Mr. Balagopal alleged that the Centre also slashed ₹3,300 crore from the State's borrowing limit in the name of the Guarantee Redemption Fund. The Centre had set a condition that a corpus equivalent to 5% of the government guarantee to financial institutions should be set aside for the fund. Failure to do so would result in a reduction from its borrowing limit equivalent to 0.25% of the GSDP. The open market borrowing limit of the State for the first nine months of the 2025-26 fiscal (April-December) had been pegged at ₹29,529 crore. On the charge that Kerala was plunging towards a debt trap, Mr. Balagopal said that the debt-GSDP ratio of the State had in fact witnessed a steady decrease since 2020-21 from 38.47% to 33.9% in 2024-25. Replying to a question, Mr. Balagopal said formal discussion had not been held yet on the formation of the new pay revision commission.
