Thiruvananthapuram: In a drastic response to the ongoing severe financial crisis, the Kerala Cabinet has decided to cut more than half of the annual budget for the current fiscal year. The government plans to eliminate non-essential projects and reduce spending on approved schemes to address the financial strain.
Under the new directive, projects with an allocation of over Rs 10 crores will be scrutinised by a committee led by the Chief Secretary to determine their necessity. Essential projects will have their funding reduced to half of the original allocation. Projects with budgets below Rs 10 crores will be reviewed by the concerned department secretary and department head, with essential projects receiving up to 50 percent of the approved funding. The revised list will be forwarded to the Chief Secretary.
The government has yet to clarify the status of projects awaiting administrative approval.
No impact on employee benefits and welfare schemes
Despite the significant budget cuts, the government has assured that employee benefits and pending welfare schemes will remain unaffected. This assurance aligns with the commitments previously made by the Chief Minister, ensuring that these areas will not be subject to the reductions.
Expenditure remains minimal
With five months of the financial year already passed, expenditure on planned schemes has been notably low due to a shortage of funds:
State annual plan: Rs 21,838 crore (15.87 percent spent)
Local schemes: Rs 8,532 crores (30.40 percent spent)
Central assistance projects: Rs 8,516.91 crores (16.21 percent spent)
Total plan expenditure: Rs 38,886.91 crores (19.13 percent spent)
Additional borrowing for festival expenses
The state government has decided to borrow an additional Rs 753 crores to cover expenses for the Onam festival. This comes after securing Rs 3,000 crores earlier this week. The Reserve Bank will auction bonds for this purpose on September 2.
By December, the state will have utilised the entire Rs 21,253 crores credit limit allowed by the central government. No further borrowing is possible for October, November, and December. However, the state has an additional eligibility of Rs 4,000 crores as per the final accounts from the Auditor General. An application has been made for this amount, but the central government's decision is still pending.
Published: 30 Aug 2024, 08:26 am IST
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