THIRUVANANTHAPURAM: Kerala Finance Minister KN Balagopal on Thursday said the Centre’s imposition of cuts in the borrowing limit of the states would adversely impact the southern state’s economy, which is yet to completely recover from the challenges due to the COVID-19 pandemic and back-to-back natural disasters. The BJP-led union government adopted a “wrong policy” to reduce the state’s borrowing capacity after including the loans taken by the special purpose vehicles like Kerala Infrastructure Investment Fund Board and Kerala Social Security Pension Limited within the state government’s overall borrowing limit, he told the state Assembly. “The cutting down of the borrowing capacity of states to three per cent from the previous five per cent will adversely impact the state’s economy,” Balagopal said. Despite repeated requests to restore the previous borrowing limit of the states and to avoid the inclusion of the loans taken by the KIIFB and KSSPL in the state’s overall borrowing, the union government had not taken any favourable step, he said.