Kerala stares at treasury curbs as Onam splurge empties coffers

Representational image.

Thiruvananthapuram: The Kerala Government could implement severe treasury restrictions in the coming days as its coffers are now near empty after spending around Rs 15,000 crore for the Onam season.

According to sources, the state government may impose restrictions on expenses, except on the payment of salaries, pension, scholarship, purchase of medicines and medical treatment. A limit could be imposed on payments for all other purposes. And once set, the state would need a special sanction from the finance department for any exception.

The government is also planning curbs on spending budget allotments. The finance department had earlier instructed other departments to spend only 43 per cent of their total budget allotment for the first five months of the current financial year. However, some departments have already spent 100 per cent of their allotted funds by the beginning of September.

But some departments have not spent the budgetary allocation, and the money remains in their accounts. Considering the financial crisis, the government may divert the balance amounts from these accounts.

No end to largesse

At the same time, various departments have been creating more posts despite the adverse financial situation. When the finance department raises objections, they present the files before the Cabinet with high-level influence.

For instance, the department rejected a move by the Beverages Corporation to regularise the salaries of 541 employees who were on deputation violating norms. However, the file was presented before the Cabinet bypassing the department and got it cleared. Similarly, the local body department too got the Cabinet not to bypass the finance department's objection.

Hopes on Central grant, GST

After the Rs 15,000-crore payout during Onam for two months’ welfare pension, staff salary, bonus, advance, and special aid to the Kerala State Road Transport Corporation (KSRTC), the state treasury balance became zero.

On Monday, Kerala expects to receive a Central grant for finance deficit compensation and a share of the Goods and Service Tax (GST). In case that payment does not come, the second Pinarayi Vijayan government would be seeking an overdraft for the first time.

Incidentally, Kerala has already withdrawn Rs 1,683 crore from the Reserve Bank of India (RBI) as ways and means advance. The state is eligible for another overdraft of Rs 1,683 crore.

However, if this amount is insufficient, Kerala will have to shut down the operations of its treasury – a situation which has occurred on several occasions in the past.

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