In the absence of specific steps, the government will soon have to avail itself of an overdraft to tide over the current financial crisis, it is learnt.

Of the Rs.12,000-crore loan eligibility limit in the current year, the government had already drawn Rs.11,000 crore so far.

The commercial sales tax collection target could not be achieved and arrears worth Rs.10,000 crore had not been collected so far. On meeting various commitments on Tuesday, the balance in the State Treasury is reported to have shrunk to about Rs.1,000 crore.

Finance Department sources told The Hindu here on Tuesday that treasury staff had expressed their reservations to act in accordance with oral directives issued by the department top brass on a daily basis to restrict the payment of bills.

The objection comes in the wake of the departmental action recommended against the staff of the Palakkad sub-treasury for failing to clear bills that came up for payment of late.

As per the system in vogue, the top officials, after evaluating the financial position each day, will give an oral directive to the Treasury Director and set a limit for making payments. This instruction will be passed on to the district and sub-treasuries and the staff will oblige. Quite often the staff will have to face the ire of the public on returning bills that go beyond the set limit.

The departmental action recommended against the Palakkad sub-treasury staff for rejecting the payment of bills is reported to have enraged them and is being considered as a bid to put the onus for the crisis on them, sources said.

The government will need at least Rs.4,000 crore within the next few days to meet routine administrative expenses other than salary and pension commitments.

The government will either have to source funds from the Kerala State Beverages Corporation or the Travancore Devaswom Board to manage its finances.

An earlier attempt to transfer funds of welfare fund boards had to be dropped following the objection of the Labour Department.

Meanwhile, it is learnt that the government had ignored a warning of the Additional Chief Secretary, Finance, for urgent action to prevent the State from going for an overdraft. An expeditious action could have reduced the intensity of the crisis, the sources said.