Kerala has formally requested supplementary grants and an extra borrowing limit of 0.5 percent amid financial pressures arising from the recent GST slab revisions and the impact of U.S. tariffs on exports and local industries. The state government highlighted that these measures are crucial to maintaining fiscal stability and meeting its developmental commitments.

The state is seeking supplementary grants under Article 275 of the Constitution, which provides for grants to states in need of financial support for public expenditure and development projects. The government has asked the 16th Finance Commission to take the financial impact of GST rate changes and international trade disruptions, including U.S. tariffs, into account when finalising its recommendations on vertical devolution and revenue deficit grants.

According to Kerala officials, the state’s finances have been significantly affected by revised GST slabs, which have reduced tax collections on certain goods and services, thereby creating gaps in revenue for state-run programs and welfare schemes. Additionally, U.S. tariffs on key export items have impacted Kerala’s trade revenues, leading to a cumulative strain on the state budget.

To address these challenges, the state is requesting an extra borrowing limit of 0.5 percent of Gross State Domestic Product (GSDP). This measure, if approved, will allow the government to bridge the revenue shortfall without cutting back on public expenditure, ensuring continuity of essential services, infrastructure projects, and social welfare initiatives.

Kerala has asked the Finance Commission to reassess its finances and resource requirements for the next five years, emphasizing that the assessment should consider both domestic and international economic challenges. The state government has stressed the importance of fair vertical devolution, which determines the allocation of central resources to states, and adequate revenue deficit grants to maintain fiscal balance.

Economic experts note that supplementary grants and borrowing flexibility are critical for states like Kerala, which face structural fiscal pressures due to high social welfare commitments, infrastructure investments, and vulnerability to external economic shocks. By seeking these measures, Kerala aims to stabilize its finances, support local industries, and maintain growth momentum.

The Finance Commission will likely evaluate Kerala’s request in the context of overall fiscal health, debt sustainability, and equity across states. The commission’s final recommendations on vertical devolution and revenue deficit grants will determine how much additional financial support the state can expect over the coming years.

Kerala’s move underscores the interconnected nature of fiscal policy, GST structures, and international trade in shaping state budgets. With GST slab revisions and global trade dynamics directly affecting revenue streams, states are increasingly relying on central support and borrowing flexibility to ensure uninterrupted governance and development.

In conclusion, Kerala’s request for supplementary grants under Article 275 and 0.5 percent extra borrowing limit highlights the challenges posed by GST changes and U.S. tariffs. The state has called on the 16th Finance Commission to reassess its finances comprehensively and ensure adequate funding for vertical devolution and revenue deficit grants. The outcome will be crucial for Kerala’s fiscal stability, economic resilience, and continued focus on public welfare and infrastructure development.

The Upcoming IPOs in this week and coming weeks are Karbonsteel Engineering, Taurian MPS, L. T. Elevator, Galaxy Medicare, Airfloa Rail Technology, Dev Accelerator, Jay Ambe Supermarkets, Urban Company, Shringar House of Mangalsutra, .

The Current active IPO are Nilachal Carbo Metalicks, Krupalu Metals, Vashishtha Luxury Fashion, Sharvaya Metals, Vigor Plast India, Austere Systems.

Start your Stock Market Journey and Apply in IPO by Opening Free Demat Account in Choice Broking FinX.