THIRUVANANTHAPURAM: Upon receiving GST arrears up to May and loan, the government has managed to emerge from a severe financial crisis. The treasury is safe till Onam.

The state was heading towards a severe financial crisis as the central government had withheld permission to take a loan. The situation had also worsened due to the non-payment of arrears. The state government was thus forced to initiate cost-cutting measures such as imposing strict controls on the treasury and deferring leave surrender benefits of government employees. Although the state was later allowed to borrow Rs 5000 crore, it did not prove to be a solution. Later, the Centre handed over GST arrears of Rs 5693 crore. In addition, the state also received a loan of Rs 1,500 crore.

Last time, the Centre had allowed the state to take a loan of Rs 31,553 crore. Later, the amount was cut by Rs 2,565 crore to Rs 28,896 crore. This time, the state prepared its budget with the expectation of borrowing Rs 39,133 crore. The Centre, however, reduced this to Rs 32,435 crore. The Centre is of the view that the money taken by the Special Purpose Vehicle Companies outside the budget for development activities should also be included in the public debt. That would result in a shortfall of Rs 17,000 crore.

June, July and August are the months when the state experiences a decline in tax and non-tax revenue. The expenses will go up significantly as well. The current availability of funds will help to overcome this.