The Opposition staged a walkout in Kerala Assembly on Wednesday in protest against what some of its members termed the “fiscal throttling” of local bodies in the state.
Congress leader K C Joseph, who moved the adjournment motion on the issue, said the treasury was refusing to honour any bills submitted by local bodies above Rs 50,000. He said Rs 1021 crore was caught in 33,658 pending bills.
Joseph also said this fiscal the practice of keeping bills in the queue began right from January 1. “Never before had such a thing happened. Last fiscal it began only on March 23, towards the end of the fiscal,” Joseph said.
Finance Minister Thomas Isaac, however, said all pending bills would be cleared in a week.
Isaac said local body bills worth Rs 836 crore were pending; Joseph had said it was Rs 1,021 crore. Of this, Rs 433 crore are bills above Rs 5 lakh. “A bill discounting system for the payment of these bills is now fully operational. Training for local body officials was completed yesterday (February 4) and the disbursal of money would begin from today,” Isaac said.
Bill discounting is resorted to in times of cash crunch and it involves the government entering into an arrangement with banks to pay the contractors. The government will pay back the money to the banks with interest. As practised in the Public Works Department, the government will bear up to five per cent of the interest and the rest will have to be borne by the contractors.
It is not clear whether local body contractors have agreed to pay the interest like PWD contractors have. Government sources said if contractors are unwilling then the local self-government department would have to step in, further pushing up project costs.
As for bills below Rs 5 lakh, the finance minster said an order had already been issued to settle the bills that came in before January 1. He said the payment of all the bills below Rs 5 lakh would be completed before February 10. “What then remains is only Rs 10 crore and steps would be taken to disburse this money, too,” Isaac said.
Isaac agreed with Joseph's figures that the plan spending of local bodies was just 42.6 per cent till date. “What Joseph said is true but where he is wrong is that he had called it a historic low,” Isaac said. “Fact is, the spending is the highest,” he added.
In 2014-15, he said the local body plan spending on February 5 was 32 per cent. In 2015-16, it was 31 per cent. In 2016-17, it was 19 per cent. In 2017-18, it was 37.5 per cent. In 2019-20, it was 42 per cent. “The only fiscal it was higher was in 2018-19 when the spending on February 5 was 60 per cent,” Isaac said. “This was the result of higher spending in the aftermath of the 2018 floods,” the minister said.