Kerala Finance Official Advocates 0.5% Borrowing Window for Capital Expenditure

KR Jyothilal, Additional Chief Secretary of Finance, Kerala, has proposed a dedicated 0.5% borrowing window for capital expenditure (capex) to alleviate the pressure on states operating under a 3% borrowing limit of GSDP. He stated that the current framework forces states to prioritize welfare spending over infrastructure development, hindering growth.

Jyothilal emphasized that capex must be protected to foster economic growth, which in turn would enhance GST revenues. Kerala is focusing on energy investments, particularly in hydropower, green hydrogen, and thorium reserves, to drive its economic growth. Jyothilal also highlighted the necessity for improved infrastructure to boost trade competitiveness and advocated for increased government investment in research and development to escape the middle-income trap, citing examples like aircraft design.