Onam, Kerala’s biggest festival, is approaching, and the state stares at an acute financial crisis.
As per rough estimates, it needs at least Rs 8,000 crore to meet the expenses during the festival season. The government faces a double challenge because, as per past precedents, it also pays the August salary of employees in July as a festival advance. The government is exploring all options to shore up revenue so that the festive mood of Onam is not affected.
On its part, the state government blames the Centre for the deficit of close to Rs 15,000 crore, which was due by way of lower revenue deficit grants and GST compensation. The state alleges that the Centre is also delaying its share of funds under different programmes. It says the Centre is yet to disburse Rs 1,600 crore, which includes Rs 371.36 crore as grants for urban local self-governments, Rs 521.96 crore as the Centre’s share in the state’s social security pension payment, Rs 750.93 crore as reimbursement of arrears due to the implementation of the 7th UGC Pay revision, and the first installment of the scheme for special assistance for capital investment. The state recently approached the Centre seeking an increase of the borrowing limit by 1% to tide over the financial crisis. It had promised to adjust the amount in the borrowing limit next year. The Union government, however, turned down the proposal.
As much as Rs 8,000 crore was spent in the festival month last year. The expenses related to universal food kit distribution, the month’s salary, pension and festival allowance for government employees, and the payment to social security and welfare fund board pensioners. Given that the political equation between the Centre and the state government is not that rosy, it is unlikely that the former would be extending any extra helping hand.
So, the state government will have to tide over the financial crunch through innovative borrowing and investment measures. Financial prudence on the part of the government usually means that more money flowing into the market brings more revenue into the exchequer as taxes. As per the local dictum, ‘Kaanam vittum onam unnanam’ (Do not mind spending even your last penny to celebrate Onam), fiscal prudence does not appear to be the mood of this season. The people deserve a happy and prosperous Onam—irrespective of all the financial constraints. That is the spirit of Onam.