According to Kerala’s finance minister KN Balagopal, the decision to impose a tax on fuel and liquor was imposed because of the union government, which informed the state on Thursday that Rs 2,700 would be cut from its borrowing limit for this financial year.
The union government has been limiting the state’s borrowing in stages to incorporate the debts of the Kerala Infrastructure Investment Fund Board (KIIFB) and Kerala Social Security Pension Ltd. (KSSPL). Balagopal described the move as a “surgical strike” on the state, coming at the last stage of the state’s budget preparation.
The state was forced to raise its tax rates due to the strict regulations imposed by the union government, which also warned of continuing this restriction next year. Balagopal stated that the state needed Rs 11,000 crore to provide social security pensions and welfare pensions to 63 lakh households and the union government had only allocated Rs 973 crore in response to the state’s request for Rs 17,500 crore from January to March.
The union government has planned to reduce Rs 14,312 crore from Kerala’s borrowing limit within 4 years, considering the loans for KIIFB and KSSPL. Balagopal maintained that the state was eligible to borrow at least Rs 4,000 crore in the upcoming fiscal year under any current rules.
Meanwhile, the opposition UDF has further intensified its protest against the state government over the tax hikes.
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