**Executive Summary**
This document is the response to Unstarred Question No. 412 in the Lok Sabha, addressed on February 2, 2026, concerning the borrowing capacity of the Government of Kerala. The Minister of State in the Ministry of Finance provides answers regarding the Union Government's stance on increasing Kerala's borrowing capacity, the state's request for unconditional increase, and the state's share in the Jal Jeevan Mission (JJM). The response refers to the financial year 2025-26.
**Key Points / Main Content**
* **Borrowing Capacity:**
* The Net Borrowing Ceiling for States is fixed at 3% of the Gross State Domestic Product (GSDP) for the financial year 2025-26, according to the Fifteenth Finance Commission's recommendations.
* States can avail additional borrowing of up to 0.50% of GSDP if they meet specific performance criteria in the Power Sector.
* The Union Government follows a uniform yardstick while considering the requests for borrowing consent to States under Article 293(3) of the Constitution of India.
* **Kerala's Request for Increased Borrowing:**
* The Government of Kerala requested the Union Government to increase its borrowing capacity via memorandum dated 09.10.2025.
* The Union Government responded via letter dated 26.12.2025.
* The Government of Kerala requested the Union Government to increase the borrowing capacity of the State for paying the State share for JJM via memorandum dated 12.11.2024.
* The Union Government responded via letter dated 01.01.2025 suggesting the Government of Kerala may avail financial assistance under Part-I of SASCI 2024-25 for paying the State share of JJM.
* **Jal Jeevan Mission (JJM):**
* The State Government of Kerala is remitting its State share of JJM.
* The State share from 2019-20 to 2024-25 is Rs. 5,479.03 crore as per the funding norms.
* The expenditure incurred by the State during the corresponding period is Rs. 6,021.96 crore.
**Impact Analysis**
**Government of Kerala**
* **Impact:** Affected by the Union Government's decisions regarding its borrowing capacity and the availability of financial assistance for the Jal Jeevan Mission.
* **Action Required:** Needs to adhere to the borrowing limits set by the Fifteenth Finance Commission, consider meeting the Power Sector performance criteria for additional borrowing, explore the possibility of utilizing Part-I of SASCI 2024-25 for paying the JJM state share.
**Fifteenth Finance Commission**
* **Impact:** Responsible for the recommendations on Net Borrowing Ceiling of the States.
* **Action Required:** N/A
**Jal Jeevan Mission (JJM), Department of Drinking Water & Sanitation, Ministry of Jal Shakti**
* **Impact:** Affected by the State Government of Kerala remitting its State share of JJM.
* **Action Required:** N/A
Key Entities Referenced
Kerala: Indian state whose borrowing capacity is under discussion.
Fifteenth Finance Commission: The body whose recommendations are used to determine the Net Borrowing Ceiling of states.
Jal Jeevan Mission (JJM): A scheme where the State Government of Kerala remitted its share, and requested to borrow an additional amount equal to the State share of JJM exceeding the borrowing limit of State of Kerala.
Ministry of Finance: The central ministry answering questions about Kerala's borrowing capacity.
Article 293(3) of the Constitution of India: Article governing borrowing consent to States.
GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF EXPENDITURE
LOK SABHA
UNSTARRED QUESTION NO. 412
TO BE ANSWERED ON MONDAY, 2nd FEBRUARY, 2026
MAGHA 13, 1947 (SAKA)
INCREASING BORROWING CAPACITY OF KERALA
412. Shri N K Premachandran
Will the Minister of Finance be pleased to state:
(a) whether the Union Government proposes to increase the borrowing capacity of
Government of Kerala unconditionally, if so, the details thereof;
(b) whether the Government of Kerala requested to the Union Government to increase the
borrowing capacity without condition, if so the details thereof along with the action taken
thereon;
(c) whether the Government of Kerala remitted the State share of Jal Jeevan Mission;
(d) if so, the total share of the State as per norms till date and the total share spent by the
State till this date and balance State share;
(e) whether the Government of Kerala requested to the Union Government to allow the State
to borrow an additional amount equal to the State share of Jal Jeevan Mission exceeding
the borrowing limit of State of Kerala; and
(f) if so, the action taken thereon?
ANSWER
MINISTER OF STATE IN THE MINISTRY OF FINANCE
(SHRI PANKAJ CHAUDHARY)
(a) No Sir. As per the recommendations of the Fifteenth Finance Commission, the Net
Borrowing Ceiling of the States has been fixed at 3 percent of the Gross State Domestic
Product (GSDP) for the current financial year 2025-26. Additionally, the States may also
avail an additional borrowing of up to 0.50 percent of GSDP subject to meeting certain
performance criteria in Power Sector.(b) Yes Sir. The State Government of Kerala vide memorandum dated 09.10.2025 has
requested the Union Government to increase the borrowing capacity of the State. A suitable
reply in this regard from the appropriate level has been sent to the State Government vide
letter dated 26.12.2025 stating that the Union Government follows a uniform yardstick while
considering the requests for borrowing consent to States under Article 293(3) of the
Constitution of India.
(c) & (d) Yes Sir. As per the information provided by Jal Jeevan Mission (JJM), Department
of Drinking Water & Sanitation, Ministry of Jal Shakti, the State Government of Kerala is
remitting its State share of JJM. The State share from 2019-20 to 2024-25, as per the funding
norms prescribed in JJM operational guidelines, is Rs. 5,479.03 crore and expenditure
incurred by the State during the corresponding period is Rs. 6,021.96 crore.
(e) & (f) Yes Sir. The State Government of Kerala vide memorandum dated 12.11.2024 has
requested the Union Government to increase the borrowing capacity of the State for paying
the State share for JJM. A reply to the State Government from the appropriate level has been
issued vide letter dated 01.01.2025 mentioning that the Government of Kerala may avail
financial assistance under Part-I of SASCI 2024-25 for paying the State share of JJM.
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