Thiruvananthapuram, Dec 24 (AHN) Kerala Chief Minister Pinarayi Vijayan has accused the central government of deliberately restricting the state's financial autonomy and undermining its development initiatives.

Vijayan was speaking to reporters here on Wednesday. He pointed out that Kerala’s efforts for capital expenditure have faced sustained obstruction over the past five years, with the most significant measure being the retrospective reduction of the state’s borrowing limit from 2021-22 onwards by treating KIIFB (Kerala Infrastructure Investment Fund Board) loans as part of the state’s debt.

The CM said that while the Reserve Bank of India had distinguished between guarantees and loans as far back as 1999, the Centre’s approach to Kerala’s borrowing limit was contrary to this principle. “Counting KIIFB guarantees as state debt is a flawed approach and a continuation of the policy that now results in a significant cut to our borrowing capacity,” he said.

Vijayan noted that despite repeated representations, including a detailed memorandum submitted to Union Finance Minister Nirmala Sitharaman on October 9, many of the state’s legitimate requests remain pending. “The Centre talks about development on one hand, but attempts are made to financially weaken states like Kerala on the other,” he said.

Highlighting Kerala’s fiscal achievements under the LDF government, the CM said net tax revenue had increased from Rs 47,000 crore in March 2021 to nearly Rs 80,000 crore today, reflecting disciplined financial management. Yet, he argued, the Centre’s actions -- including reduced borrowing limits, delayed approvals, and cuts to IGST settlements -- have undermined the state’s progress.

Vijayan also pointed to the impact of international trade restrictions, particularly U.S. import controls, which have affected seafood, spices, cashew, and textiles, causing annual losses of around Rs 2,500 crore. “Despite these challenges, the Centre has arbitrarily cut allocations, including Rs 14,358 crore from our borrowing limit for 2025-26 alone, weakening Kerala’s fiscal capacity,” he said.

The CM criticised the central government for misusing Article 293(3) of the Constitution and for treating funds raised by KIIFB and the Social Security Pension Limited as part of the state’s debt. He said this was politically motivated and undermined Kerala’s development model. Vijayan warned that the state would continue to pursue its development agenda despite these obstacles.

“Kerala has achieved remarkable growth in revenue and resource mobilisation, and we will not allow arbitrary central interventions to derail our progress,” he said.