Kerala financial crisis set to worsen

In the absence of specific resource mobilisation efforts, the financial crisis gripping the State is likely to intensify in the months ahead.

The government has been scrapping the bottom of the barrel to meet its commitments in March and April.

It may find the going more tough in the coming months.

Finance Department sources told The Hindu here that the government might garner resources to meet the salary, pension, and such other routine expenses but honouring major commitments, including pending bills of contractors worth about Rs.2,400 crore, clearing welfare pension arrears, and repaying loans from various sources, including welfare fund boards, would be a major challenge.

Bonds worth Rs.1,000 crore to be floated within the next two days might not be sufficient to meet the major commitments. The mounting welfare pension arrears and other expenses would have to be disbursed before Onam.

With Onam in the first week of September, the government would be relieved of the burden of paying the month’s salary and pension in advance but would have to find means to foot the festival allowance and bonus. No clear plan had been evolved to meet such exigencies, the sources said.

The core issues that intensified the crisis continued to remain unaddressed.

The order directing government employees to route their salary from the treasury to banks was still in force.

Even if the government decided to revoke the facility, it may not be easy for the employees to opt for payment through the treasury.

For, the banks had liberally given loans against their salary. It would not be easy to clear the loans and transfer the accounts to the treasury at one go, the sources said.

Substantial sums of various departments were parked in the banks. The earnest money deposits of works, including those executed using the asset development fund of MLAs, had been deposited in the banks.

Lack of political will in questioning the veracity of the bureaucratic decision to shift government funds from the treasury to the banks was being cited as one of the reasons for the crisis.

The ad hoc solutions adopted sans a thorough discussion or planning for overcoming the crisis had also come in for criticism.

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Printable version | Apr 21, 2021 11:08:01 AM |

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