Kerala Govt to meet Onam expenses through borrowings

Finance Minister K N Balagopal. Photo: Manorama

Thiruvananthapuram: With the Onam festival season around the corner, the Kerala Government is exploring all options to shore up revenue as the state is facing an acute financial crisis. The government feels that by paying salaries to staff, funds would reach the market and from there, the treasury would receive revenue as taxes.

The main challenge before the state’s Finance Department is finding funds to pay two months’ salaries in August. Apart from the salary for July which is being disbursed now, the government has to make the payments for August also before the Onam celebrations.

The government is expected to allot Rs 750 crore for food kits and market intervention by Supplyco. All welfare pensions also are likely to be distributed before Onam. The amount needed for payment of a month’s salaries for government employees is around Rs 5,300 crore.

Meanwhile, the government has plans to grant Onam bonus as well as festival advance to its employees this year also. However, the Finance Department is yet to find the funds for making this payment.

Finance Minister K N Balagopal held discussions with officials on collecting the entire GST for July. All measures to prevent loss of tax revenue would be explored, said officials.

According to officials, the government would need Rs 10,000-15,000 crore to meet all the Onam expenses. “As there is no money in the treasury, the government has no option other than resorting to borrowings from the open market,” said an officer. In the event of lack of support from the Central Government, the state would have to borrow from cooperative banks, he added.

Incidentally, the state has already requested the Centre to raise the borrowing limit by one percent. In the event of the Centre temporarily allowing this plea for the current year, the state has promised to adjust the amount in the borrowing limit next year.

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