Centre mum on Rs 5,000 crore GST arrears
THIRUVANANTHAPURAM: The permission by the Union finance ministry to borrow Rs 5,000 crore on an ad hoc basis will only serve as a cosmetic solution to the acute financial crisis the state has been in. The amount will be sufficient to manage day-to- day expenses including payment of salary and pensions for two to three months. But, crisis will be deep when the government will have to make additional payments as festival allowance and bonus ahead of Onam.
The latest decision by the Union finance ministry followed a detailed letter sent by Finance Minister K N Balagopal after the cabinet meeting on Wednesday. The minister apprised the cabinet of the acute crisis and requested the intervention of the CM to tide over that. As decided by the cabinet, Balagopal wrote yet another letter seeking permission for borrowing and to release pending GST compensation amount.
The state hasn’t received Rs 4,011 crore GST compensation which has been due since last fiscal. In April, the state was supposed to receive another installment of Rs 997 crore, which hasn’t also been released. The minister sought steps to release Rs 5,008 crore as GST compensation immediately, but, Friday’s reply from the Centre is mum on this factor.
The decision of Union government to make a cut in revenue deficit grant will also hit the state badly. In place of Rs 19,891 crore revenue deficit grant the state received last year, the finance ministry has approved only Rs 13,174 crore this fiscal. The shortage of Rs 6,717 crore in this head will be another blow to the state.
Sources in the government said chances are very low that the Centre would subscribe to the argument that borrowings by institutions such as KIIFB need to be viewed separately from state’s borrowings. In that event, the borrowings by KIIFB and KSSPL amounting to around Rs 9,000 crore in the last fiscal will have to be deducted from the allowed borrowing limit of Rs 32,435 crore for the state this fiscal.