Flood and crunch: Kerala mulls to cut plan fund by 45%

The key sectors which are expected to affect are roads network, transport, agriculture, tourism and welfare projects.

Published: 04th September 2019 05:47 AM  |   Last Updated: 04th September 2019 05:47 AM   |  A+A-

Kerala_monsoon_rains

A visual from Kerala floods. (Photo | EPS)

By Express News Service

THIRUVANANTHAPURAM: Faced with looming financial crisis, which followed the back-to-back flood, Kerala is mulling another round of austerity measures and plan-fund cut for the second straight year, dealing a major blow to the state’s development dreams.

According to a Planning Board source, the mid-term financial review meeting has suggested to cut plan fund expenditure by around 45 per cent.The decision is likely to impact a slew of big-ticket projects announced in the last budget as part of rebuilding the state following last year’s flood. 

The key sectors which are expected to affect are roads network, transport, agriculture, tourism and welfare projects.

The state government will adopt a two-way approach. While the Planning Board will direct the department heads to re-prioritise their projects in the remaining period of the fiscal year, the finance secretary will 
ensure the projects are executed by strictly adhering to the norms and without cost escalation. 

Almost all the departments, except local self-governance department, schedule cast/scheduled welfare department, education and health, will bear the brunt of the plan-fund cut.
Last year, the state government had effected a 20 per cent plan-fund cut for various departments in the aftermath of the devastating flood. As per the budget, the state’s borrowing limit for the current year was fixed at `26,265 crore. Considering the precarious financial situation in the country and the percentage of fund availed by the state within the first five months of the fiscal year, the decision is expected to cost the state’s development prospects dear.

The plan fund utilisation, according to officials, is pegged at around 17 per cent till August. Of this, plan fund utilisation constituted five per cent, and the remaining were the bills of various projects announced in the last financial year.

So the situation will be very perilous in the coming days, considering the fact that only around five per cent of the fund was spent when the decision to cut 45 per cent of plan fund was taken.
Though the Finance Department points out the second flood as the reason for the plan fund-cut, reliable sources hinted that there has been an understanding to implement 35 per cent cut after the financial situation worsened in the state.

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