Kerala

Centre pushing State to financial crisis: Isaac

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Minister says major cut in Central transfers will derail finances

A major cut in Central transfers will lead to a shortfall of ₹8,330 crore in the last leg of the current financial year and that will derail the State’s finances and further deepen the crisis, Finance Minister T.M. Thomas Isaac has said.

Dr. Isaac told reporters here on Thursday that as per the budget estimates, the State was eligible for a loan of ₹10,233 crore in the last quarter, but it had been reduced to ₹1,920 crore. This was against the ₹3,200 crore sanctioned for the last quarter in the previous year. The State would also have to repay ₹4,615 crore as principal and interest of the loans availed of so far.

Loan slashed

Against a loan of ₹19,500 crore the State received in the last financial year, it had been slashed to ₹16,602 crore in 2019-20. About 50% of the State’s income was derived from the divisible pool of Central taxes, grants and loans, the Minister said.

The Centre was also cutting grants too. The Goods and Services Tax compensation for December amounting to about ₹1,600 crore had not yet been sanctioned.

It had already been indicated that the State’s share from the Central taxes amounting to ₹6,866 crore given in the last leg of the previous financial year might be reduced to ₹4,524 crore this year.

Arrears mounting

The arrears in Centrally sponsored schemes were also mounting. A sum of ₹1,215 crore due under the Mahatma Gandhi National Rural Employment Guarantee Scheme had yet not been cleared. The same applied in the case of the ₹1,035 crore due for paddy procurement. The Centre had excluded the State from the assistance granted for flood relief and rehabilitation, Dr. Isaac said.

The cut in annual borrowing limit of the State had also dealt a major blow to the State. Lack of clarity and uncertainty on Central assistance were thwarting the State from working out a plan for managing the available resources, he said.

Hence, the government had decided to clear the pending bills of accredited agencies, local bodies and contractors from the treasury in the third week of January through a bill discounting system, the Minister added.

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Printable version | Jan 21, 2020 12:10:33 AM | https://www.thehindu.com/news/national/kerala/centre-pushing-state-to-financial-crisis-isaac/article30524548.ece

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