THIRUVANANTHAPURAM: An amount of Rs 4,122 crore sanctioned by the Centre as tax devolution and IGST settlement has helped the state government weather the financial crisis, at least for the time being. It helped the government to source money for disbursing the salary and pension of government employees.
The government is exploring different options to mobilise funds for the huge payout in the financial year end. The treasuries department had recently announced a higher interest rate on fixed deposits. Under this, deposits for a period of 91 days made between March 1 and 25 will get 7.5 pc interest. This higher rate is otherwise given only for deposits for a period above two years.
The state also expects a favourable interim order from the Supreme Court next week in the petition against the alleged unilateral cut in borrowing limit. The Centre had put on hold the allocation of an additional borrowing space worth Rs 13,609 crore following the court case. It also asked the state government to withdraw the petition to get the amount sanctioned.
The state government would seek an interim order from the court for immediate sanction of the additional space at the next hearing of the case scheduled next week.
Of the Rs 13,609 crore, Rs 4866 crore is the reward for the power sector reforms, Rs 4323 crore which was reduced due to a miscalculation of funds parked in public accounts, Rs 1877 crore as carryover from the previous financial year, and Rs 2543 crore as replacement loan.
The state requires at least Rs 22,000 crore to meet its priority payments in the financial year end.
“The Central transfer, funds received through the new fixed deposit scheme and certain other receipts will help the government meet the huge payout in April. Sanction for additional borrowing space is crucial,” said a source.
Earlier, the government used to avail short-term borrowings from cooperative banks in crisis times. But the revised norms on fixing the ceiling on market borrowings restrain the government from doing this. As per the new norms, such borrowings would be adjusted from the net borrowing ceiling for the next financial year.
Finance Minister K N Balagopal on Friday criticised the Central government for withholding sanction for the additional borrowing space.
“The money would have helped the government meet the payments in February and March. Other states have been given sanction for this,” he said in a statement. Of the recent sanction of Rs 4,000 crore, Rs 2736 crore was tax share and Rs 1386 crore was IGST settlement, he said.
Technical issues hit salary disbursal
Government employees who receive salary through bank accounts did not get money on Friday. The government credits salary and pension amounts to the Employee Treasury Savings Bank account or Pensioners Treasury Savings Bank account of each person. Employees and pensioners who had opted for auto transfer of this amount to their bank accounts did not get money on the day. Those who directly draw the amount from treasuries did not face trouble. Government sources said the issue was due to a technical glitch in the RBI’s payment solution ‘e-kuber’. Some employees associations affiliated to opposition parties alleged that the treasuries department disallowed the transfer process due to a shortage of funds.