Kochi: The state government said in the High Court (HC) that it is undergoing a severe financial crunch. The government submitted an affidavit in the HC, stating its bad financial position in the case relating to the KErala Transport Development Finance Corporation Ltd. (KTDFC). The court criticised this affidavit stating that it put the state in a bad light.

The government has submitted such an affidavit amidst  the opposition’s accusations that the government is indulging in extravagant spending during the financial crisis. The HC asked whether the state would need to declare a financial emergency, given the circumstances while reminding the government that the court holds the power to declare such an emergency if it sees fit.

The court opined that the other states would evaluate Kerala based on this affidavit. The government’s stand is that it cannot take up KTDFC’s liability. However, people deposited their money in KTDFC under a guarantee from the government. If the state refuses to take responsibility, who would be willing to invest in the state, the court asked. Therefore, the HC demanded that the affidavit be revised and filed again.

KTDFC informed the government that the reason for its crisis is the non-repayment of the Rs 360 crore it loaned to KSRTC. This amount has now gone up to Rs 900 crore with interest. However, KSRTC is not in a position to repay the money. Thus, KTDFC wants the government to take up this liability and make the payment. In 2021-22, the Reserve Bank of India prohibited KTDFC from accepting deposits which cut off its income source. 

"Our state is now passing through a phase of financial constraints. Any monetary benefit has to be allowed within the financial resources available with the government," the government contended. The state also said in its affidavit that the KTDFC and the Kerala State Road Transport Corporation (KSRTC) can mortgage the property or sell one or two items of the property to outside parties or government agencies to solve their financial issues.

"But, unfortunately, no positive steps have been taken by KTDFC or KSRTC," it told the court, adding that the two entities together have immovable properties worth about Rs 1,000 crore in the state. The government also claimed that despite facing a huge financial crisis, it has released Rs 8,440.02 crore to KSRTC for various expenditures from 2018-19 to October 15, 2023.

"Even though the government is supporting Public Sector Undertakings, including KSRTC, in different ways, it is obvious that the government is not legally bound to give financial support to meet its day to day affairs," it said in the affidavit.

(Inputs from PTI)