LDF government to tap off-budget borrowings

Thiruvananthapuram: The LDF Government will go for massive off-budget borrowings to infuse Rs 50,000 – Rs one lakh crore into the state economy in the next five years. This was stated in Governor P Sathasivam's address to the Assembly on Friday. A legislation will also be introduced to insulate investors willing to pump in substantial sums from political and other kind of risks.  

“The options before my government are severely limited,” he said. Borrowing using the RBI route is an alternative but this, he said, had to be contained within the limits allowed by the Centre. Another option was to impose treasury restrictions as was done during the last year. But he said this would entail drastically cutting down or deferring essential expenditure, which according to the Governor would affect the poor and workers in the agricultural and traditional sectors.

“This is an option my Government will never adopt,” he said.  It is in this context that he said that the LDF government would tap off-budget market borrowings. “A creative development strategy will have to be formulated to accelerate growth by increasing public investments in mega projects through off budget borrowings using special purpose vehicles,” the Governor said.

Conservative estimates indicate that the state needs an infusion of Rs 50,000 – Rs 1L crore funds for infrastructure, both in the public and private sector. “This means that Kerala will have to mobilise 10- l5 percent of its current GDP during the next five years for infrastructure. The task is not easy,” he said. The Governor said two financial institutions will be restructured as Non-Banking Financial Companies (NBFCs) and aligned in compliance with SEBI and RBI regulations to mobilise borrowings from abroad.