Kerala has sought a special financial package of ₹24,000 crore from the central government, Minister of State for Finance Pankaj Chaudhary informed the Rajya Sabha in a written reply on Tuesday. This request from Kerala is part of a broader appeal for financial assistance by various states to address critical infrastructure needs and regional development projects.
According to Chaudhary, Kerala’s request was outlined in a letter dated June 27, 2024, from the state’s Finance Minister. In addition to the ₹24,000 crore package, the Kerala government has also sought a special capital investment support of ₹5,000 crore to develop the Vizhinjam Port region, a major infrastructure initiative aimed at enhancing the state’s maritime capabilities.
Financial Requests from Other States
Alongside Kerala, other states have also put forward significant financial requests to the central government. Andhra Pradesh has asked for ₹15,000 crore to support the development of its capital city, Amravati. The state has also requested ₹17,144.06 crore for various sectors, including the critical Polavaram irrigation project. These funds are intended to boost infrastructure development, facilitate industrial growth, and improve essential services in the state.
Similarly, Bihar has made multiple requests totaling ₹785 crore. These include ₹375.35 crore for social welfare initiatives and an additional ₹410.35 crore for the development of airports, healthcare, education, sports infrastructure, and water resource management. Bihar’s requests also include enhancements to rural development and a plea for a higher borrowing ceiling to support various ongoing and planned projects.
Kerala’s Request for a Special Financial Package
Kerala’s plea for a ₹24,000 crore special financial package is part of a larger effort to address financial constraints and stimulate growth in the state’s economy. The state has faced multiple challenges, including natural disasters and economic slowdowns, making external financial assistance crucial for sustaining and accelerating development.
The additional ₹5,000 crore requested by Kerala is specifically earmarked for the development of the Vizhinjam Port region. The Vizhinjam International Multipurpose Seaport Terminal Project is one of Kerala’s most ambitious infrastructure projects, aimed at positioning the state as a major maritime hub in the Indian Ocean region. This port development is expected to boost trade, improve logistics capabilities, and create numerous employment opportunities.
To support the Vizhinjam project, the Department of Economic Affairs (DEA) has already approved a Viability Gap Funding (VGF) grant of ₹817.80 crore. This grant is part of the DEA’s VGF Scheme, which provides financial support to infrastructure projects that are economically necessary but financially unviable in the early stages of development. The additional ₹5,000 crore requested by Kerala would further bolster this critical project.
Andhra Pradesh and Bihar’s Financial Needs
Andhra Pradesh’s request for ₹15,000 crore to develop its capital city, Amravati, is aligned with the state’s long-term vision of creating a modern, well-planned capital that can serve as a center for governance, industry, and commerce. The request also includes ₹17,144.06 crore for the completion of the Polavaram irrigation project, a crucial initiative aimed at improving water resource management and agricultural productivity in the region.
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In response to Andhra Pradesh’s needs, Finance Minister Nirmala Sitharaman announced in her 2024-25 Budget speech that the central government would facilitate special financial support through multilateral development agencies. The government has committed to arranging ₹15,000 crore for the current financial year, with the possibility of additional amounts in the future to further support the state’s development goals.
Bihar, a state with significant developmental challenges, has also sought ₹785 crore to fund a range of projects. The state’s requests cover vital sectors such as healthcare, education, and infrastructure development, which are key to enhancing the quality of life for its residents. Additionally, Bihar has requested an enhancement of its borrowing ceiling, which would allow the state to raise more funds for various ongoing and future initiatives.
Central Government Support to States
Minister Pankaj Chaudhary emphasized that the central government provides substantial financial resources to states, including Kerala, through various mechanisms. These include Finance Commission Recommended Grants, Central Sector Schemes, Centrally Sponsored Schemes, and Special Assistance (Grant) schemes, such as those for capital investment. Additionally, states are granted permission for additional borrowing to fund critical projects.
As states like Kerala, Andhra Pradesh, and Bihar continue to face financial challenges, the central government’s support remains crucial for their economic development and infrastructure improvement. The combination of central grants, special financial packages, and multilateral assistance is vital to ensuring that these states can meet their developmental goals and improve the lives of their citizens.
The requests made by Kerala, Andhra Pradesh, and Bihar highlight the ongoing need for cooperative federalism and financial collaboration between the center and states to ensure balanced growth and development across the country.
