THIRUVANANTHAPURAM: The government is dealing with a severe financial crisis which may result in the curtailment of Onam celebrations. The state is currently facing its worst financial situation in the past five years leading to the imposition of strict restrictions on treasuries and a need to reduce expenses related to the festival.
The state treasury has been in overdraft for over a week having taken a loan of 4,500 crores in three instalments this month. Last year a similar overdraft situation occurred after Onam. It was managed without significant consequences.
At present, the treasury is allocating funds for the distribution of salaries, pensions and one month's arrears of welfare pension amounting to 890 crores. When the treasury reaches its limit, the Reserve Bank provides temporary funding through Ways and Means with a maximum limit of 1,670 crores. If this cannot be repaid an overdraft is required. The overdraft limit is set at 14 days. The necessary income to resolve the crisis has not yet materialized.
In this situation, it is crucial to reduce unnecessary expenses. The Chief Minister has repeatedly instructed each department to prioritize their expenditures. Significant amounts are still being allocated for expenses such as the modernization of ministerial buildings and offices. Departments continue to create new positions and increase expenses.
If the state decides to take loans to overcome this issue, it will face tight control from the central government. The cessation of GST compensation, reductions in fiscal deficit allocation and central tax allocation have further worsened the financial crisis.
The highest expenditures occur during Onam and in the month of March, which marks the end of the financial year.
The estimated expenses for Onam
7,900 crores
1,700 crores
1,500 crores
15,000 crores