The Reserve Bank of India (RBI) has granted some respite to the State government by allowing it to issue bonds worth Rs.1,000 crore that might help it tide over the financial crisis for the present.
Finance Department sources told The Hindu here on Thursday that funds mobilised by issuing bonds would have to be expended totally on paying salary and pensions.
This would have a direct bearing on the development initiatives proposed for the current financial year.
It would also increase the overall burden of the government and further weaken its financial health, the sources said.
Against the expected Central tax share of Rs.800 crore, the government had so far got only Rs.600 crore. The arrears due to contractors are reported to have crossed Rs.3,000 crore, which include the bills that have already been presented for clearance, as well as the payment for the completed works and also that are awaiting completion certificate from the government.
The sources said the confusion over renewing bar licences had also choked one of the main revenue sources. The government directive to heads of departments for resuming the funds parked in commercial banks and deposit it in the treasury had not received an encouraging response so far.
But for issuing a routine directive, the government did not insist that the officials concerned should furnish an affidavit on the funds resumed from the banks.
Despite a warning that any lapse in complying with the order would invite punitive action, the officials did not treat it with due seriousness, the sources said.
The lack of foresight of the Finance Department higher-ups in directing the officials to transfer the funds from the treasury to the banks had also invited criticism. There had been complaints that the decision had given way to corrupt deals.
Since such decisions came as a windfall for the banks, it would set the ground for corrupt practices, but such aspects seldom came in for scrutiny at the highest level. An intensive resource mobilisation drive had been planned after the elections to tackle the crisis, the sources said.
