State faces financial crisis as center delays loan approval; June salaries and pensions at risk

THIRUVANANTHAPURAM: The state is worried about the central government’s stance of not responding to its loan request even after two months into the new financial year. The state has sent two letters but the Center has not responded. If this situation continues, the payment of salaries and pensions will be in crisis in June.

It is learned that State Finance Secretary Rabindra Kumar Agarwal has returned to Delhi to persuade the Center to approve the loan. More than 16,000 employees will retire in the month of May and their benefits should also be provided.

Normally, the Center notifies about loan availability in April. Based on that notification, the state takes monthly loans. This has not happened this time. The Center has also not considered the state's request to grant at least temporary permission. It is suspected that this is a retaliatory action because Kerala approached the Supreme Court against the loan control. The case filed in the Supreme Court has been left to the Constitution Bench.

There are only five days left in May. Loans can be taken through the RBI on Tuesdays and Fridays. Kerala typically takes loans on Tuesdays. Since there is no notification from the Center yet, it is uncertain whether the loan will be available next Tuesday. At least 5000 crores will need to be borrowed this month.