Relief for Kerala; State government receives Rs 4122 crore from centre

THIRUVANANTHAPURAM: The state government, facing a standstill in salary and pension disbursements, received a crucial sum of Rs 4122 crore from the Centre. This amount, comprising Rs 2736 crore as a regular tax installment and Rs 1386 crore as the share of unclaimed IGST, arrived unexpectedly on March 1st. The infusion helped alleviate the treasury's overdraft limit, enabling the initiation of salary and pension payments. However, the sum fell short of requirements.

The government faces a pressing need for a minimum of Rs 22,000 crore to navigate through March, the final month of the financial year. A potential source of Rs 13,608 crore exists through power sector reforms and the availability of repaid loans from treasury investments, contingent on approval from the Centre. The Centre's stance links approval to the withdrawal of a case against it in the Supreme Court, which will be deliberated on March 6 and 7.

The current financial strain had raised concerns regarding the government's ability to meet salary obligations for the month. Despite limited funds from the Treasury, Cooperative Banks and Welfare Boards, there is uncertainty in meeting these commitments.

In anticipation of elections, the government aspires to issue orders for the distribution of social welfare pensions, but the economic downturn poses challenges to such initiatives.

Furthermore, the disbursement of one installment of Dearness Allowance (DA) to government employees may face delays.

Current financial breakdown stands at Rs 3700 crore in overdraft, Rs 3336 crore required for salary payments, Rs 2353 crore needed for pension disbursement and a total requirement of Rs 5689 crore for both.

With a liability of approximately Rs 40,000 crore, including six months' arrears of social welfare pensions, plan fund allocations, bank dues, loan repayments, salary and pension distributions, contract obligations and benefit disbursements, the end-of-financial-year expenses alone amount to around Rs 22,000 crore.

The financial strain has resulted in the unprecedented halt of salary disbursements on the first day for employees, a situation not witnessed in fifteen years. Technical issues impeding fund transfers to treasury savings accounts have exacerbated the situation, leading to delayed pension payments for many recipients.

State Finance Minister KN Balagopal emphasized the severity of the financial crisis, highlighting the challenge posed by the Centre's conditionality on loans and its implications on the judiciary and constitutional principles. This matter will be addressed in the forthcoming Supreme Court proceedings.