Date:09/03/2007 URL: http://www.thehindu.com/2007/03/09/stories/2007030915160400.htm

Kerala - Thiruvananthapuram

External debt to be brought down to a quarter

Special Correspondent

Finance Minister T.M. Thomas Isaac

THIRUVANANTHAPURAM: Finance Minister T.M. Thomas Isaac told the Assembly on Thursday that the external borrowings of the State would be brought down to a quarter of the present level by the end of the term of the Left Democratic Front (LDF) Government.

Replying to a debate on the demands for final supplementary grants in the Budget for the current year, the Minister said the LDF had had firm views on the need to bring down external borrowings. The current year's borrowings from abroad stood at Rs.2,300 crore.

The State Government was not free to raise any amount of loans from the open market. The Centre had imposed a ceiling of Rs.1,400 crore for market borrowings this year. He said there was nothing wrong in the Government availing itself of loans provided that the rate of growth was higher than the interest rates. The State's borrowings would touch Rs.60,000 crore by the end of the next financial year.

Mr. Isaac admitted that the Cabinet should have discussed the loan agreement with the Asian Development Bank (ADB) for the Kerala Sustainable Urban Development Project before the State signed it. There was a procedural lapse in this regard.

He said the party stand in favour of taking the loan had been made known before the Assembly elections. All the mayors of city corporations belonging to the CPI (M) had agreed to accept the loan and party State secretary Pinarayi Vijayan had written an article clarifying the party's stand. The party's objection was to taking the structural adjustment loan for Modernising Government Programme.

After the Minister's reply, the House passed the demands.