New Delhi: The central government has attributed the financial crisis in Kerala to the failure of the state government, citing mismanagement within the state’s finance department. This is outlined in a note detailing the state’s financial situation, which has been submitted to the Supreme Court.
According to the note presented by the Union Finance Ministry through the Attorney General’s Office, the central government has fulfilled all due payments to the state, including central taxes and funds for central projects. However, the central government contends that Kerala’s finance department is poorly managed, leading to the current crisis. The note also revealed that Kerala has a very bad finance department.
The note highlights that the state’s debt, which was 31 percent of the total revenue in 2018–19, has escalated to 38 percent in 2021–22. Despite a proposed limit suggesting that the total interest on state debt should not exceed 10 percent, it surged to 19.8 percent in the last financial year. Kerala is also listed among the five most indebted states in the country.
The Union Finance Ministry, in its communication to the Supreme Court, asserts that the state’s financial condition is adversely impacted by the high interest rates and, consequently, the borrowing limit cannot be raised.
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