No relief in sight for Kerala's salary crisis; SC to hear state’s case on borrowing limit

Representational image: Shutterstock/witsarut sakorn

Thiruvananthapuram: Grappling with an acute financial crisis, the Kerala Government has failed to fulfill its promise of distributing salaries and pensions within three days. As of Tuesday, the fifth day of the month, not even half of the government employees had received their salary. In fact, sources indicate that salary payments are unlikely to be completed this week.

The only group of employees who received their full salary were the Secretariat staff. Following the clearance of their payments, the Secretariat Action Council, which had initiated a hunger strike over the delay in salary distribution, called off its agitation.

However, a significant portion of police personnel, who were supposed to be paid on the first working day of the month along with Secretariat employees, are yet to receive their salaries.

On Tuesday, the Kerala Legislature Secretariat Association submitted a petition to the Speaker and Finance Minister, pointing out that their salaries had not been credited. Subsequently, the money was transferred to their accounts by 9 pm.

Meanwhile, employees in the Health and related departments, as well as those under the Education and allied departments, whose salary day is the second working day of the month, are still awaiting payments.

According to government sources, salaries are currently being paid with the 'Ways and Means Advance' from the Reserve Bank of India (RBI). This advance, provided by the RBI as a loan when the state treasury lacks sufficient funds, has a limit of Rs 1670 crore. Additionally, another Rs 1670 crore could be availed as an overdraft. However, these amounts must be repaid to the RBI within 14 days, and any failure to do so could lead to a moratorium on the functioning of the treasury.

The state treasury became depleted on March 1 due to the Kerala Government's repayment of Rs 2736 crore, which was received from the Central Government as the overdraft period ended, and another Rs 1386 crore allocated as IGST settlement, to the RBI.


Presently, the state has imposed a daily cap of Rs 50,000 on withdrawals from treasury savings accounts (TSB), employee treasury savings accounts (ETSB), and pensioner treasury savings accounts (PTSB). The same cap applies to withdrawals of interest from fixed deposits.

No restrictions

Meanwhile, there is no limit on the amount that could be withdrawn by closing fixed deposits. Employees whose salaries are credited to their bank accounts have received the full amounts, and there is no cap on the money that could be withdrawn from banks.

Crucial SC hearing

The Supreme Court, where the Kerala Government has filed a case over limits imposed by the Centre on borrowings and reduction in tax shares, will hear the matter on Wednesday and Thursday.

Government sources indicate that Kerala is likely to seek an interim order before the end of the current financial year if the court decides to conduct a prolonged hearing of the case.

The state government is optimistic about receiving a favorable order from the apex court by Thursday. It will also urge the court to direct the Centre to allocate an amount of Rs 13,609 crore, which it rightfully deserves. However, the Centre has requested the state to withdraw the case in the Supreme Court to release this money.

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