Kerala Fights for Fiscal Flexibility Amid Borrowing Cuts

Kerala's Finance Minister KN Balagopal urged Union Finance Minister Nirmala Sitharaman to reconsider reduced borrowing limits, which are impacting the state's fiscal health. Reduced GST revenues and adverse export conditions have compounded Kerala's financial woes, raising concerns about maintaining essential services and development projects.

Kerala Finance Minister KN Balagopal has pressed Union Finance Minister Nirmala Sitharaman to address the state's fiscal struggles exacerbated by reduced borrowing limits. The state's plea comes amid wider concerns about the fiscal policies of the BJP-led Centre, which impacts revenue and borrowing capacity.

Balagopal, during a meeting with Sitharaman, highlighted the serious fiscal challenges faced by Kerala due to a combination of factors, including GST rate rationalisation and trade developments. The reduction in borrowing limits for the fiscal year ending March 2026 has coincided with upcoming state elections, intensifying the pressure.

The finance minister emphasized that the state's dependency on GST revenues, coupled with export sector challenges due to US tariffs, has led to a significant fiscal deficit. This has narrowed Kerala's financial capacity to fund public services, welfare programs, and developmental initiatives.

(With inputs from agencies.)