The Kerala government is reportedly gearing up to float bonds worth Rs.1,000 crore to tide over a financial crisis. Official sources told The Hindu on Monday that preliminary discussions and formalities had been completed. The Reserve Bank of India (RBI) had reportedly given its concurrence for the process.
The move was being construed as a pointer to the grim financial crisis gripping Kerala and its failure in mobilising resources to meet the mounting expenditure. Bonds worth Rs.1,000 crore were floated during the beginning of the financial year and this would be the second bid. The capital was expected to give temporary relief to the government as it would clear at least a component of the Rs.2,500 crore arrears due to government contractors. They had threatened to boycott new tenders and ongoing works. It would also clear the salary bills in the coming months, especially during the Onam season, sources said.
Since the festival season was in the first week of September, the government would need funds to disburse salary as well as festival allowance and advance to employees and welfare pension arrears to various sections, among other things. Rough estimates pegged the overall festival expenses of the government at Rs.4,000 crore.
Recently, the government had issued a circular to the heads of departments against making fresh appointments and creating new posts.
The alleged financial imprudence of the government has come in for criticism. Even while trying to draw loans from all available sources, precious little was being done to improve tax collection to address the crisis, sources said.
There were complaints that no permanent solutions were being considered to improve fiscal health. If the crisis prevailed, it would inevitably lead to a cut in Plan funds and the government would be forced to go slow or shelve development projects for the current financial year.
For, many of the projects involved huge commitments, mainly for land acquisition, sources said.
