A State government bid to mobilise Rs.1,500 crore from various welfare fund boards through a special deposit campaign to avert the liquidity crisis during the month-end is unlikely to yield the desired result.
In order to address the urgent financial requirements, the government had proposed to launch a special deposit campaign similar to a resource mobilisation initiative experimented in March last. The government had secured Rs.400 crore from various welfare fund boards at 10.5 per cent interest.
The latest proposal was to raise short-term deposits for one to three months at the same interest rate from the boards to overcome the overdraft position. The Finance Department is planning to raise the deposits in the fourth week of this month so that the government will not have to run into overdraft to meet the committed expenditure in the first week of October.
Since the government has no scope for public borrowing for the next quarter before October 14, the State runs the risk of slipping back into overdraft again by the month end and attempt to mobilise funds from the welfare fund boards was the only option it had on hand. Other than what is required by the boards for honouring their routine expenditure such as salary, pension, medical reimbursement, and other benefits due to the subscribers and members, it was proposed to persuade them to park their surplus funds in the treasury to overcome the imminent crisis.
Official sources told The Hindu here that even if the government gave a direction on this score, the boards would have to mandatorily secure the consent of their director boards for diverting the funds. Such formalities will have to be completed in haste.
More importantly, the boards should have adequate funds at their disposal to be diverted for such purposes. But for the Kerala Building and Other Construction Workers Welfare Fund Board, Kerala Toddy Workers’ Welfare Fund Board, and such others, majority of them did not have enough funds and hence the government may not be able to tap them for such major requirements, sources said.
