Priyadarsini Free Journey: KSRTC bears interest burden on government compensation, faces ₹47 lakh monthly vehicle tax

Kollam: KSRTC is being charged interest in advance on the financial assistance provided by the government as compensation for the Priyadarsini Free Journey scheme.

The Kerala Financial Corporation (KFC) charges 4.9 per cent interest on the ₹100 crore provided to KSRTC twice a month. When ₹50 crore is credited to KSRTC's account, ₹2.45 crore is deducted as interest, leaving the corporation with ₹47.55 crore.

Initially, interest is deducted at the rate of 9.8 per cent. Six days later, the government refunds half of the amount deducted as interest to KSRTC.

The corporation receives government assistance of ₹50 crore towards salaries and ₹72 crore towards pensions only after the deduction of 9.8 per cent interest. Although the regular government assistance provides significant relief to KSRTC, the arrangement could become a major financial liability for the corporation in the future.

During the previous LDF government's tenure, the financial assistance was provided directly from the Treasury, and no advance interest was charged. However, the assistance was treated as a liability on KSRTC's books. Interest is now being charged because the funds are being provided through a loan raised from KFC.

KSRTC Managing Director Pramoj Shankar told Mathrubhumi that the government would refund the interest deducted in advance in the future.

The government's recent decision to withdraw the vehicle tax exemption previously granted to KSRTC has also added to the corporation's financial burden. An order issued by the government states that KSRTC must now renew its permits by paying a monthly vehicle tax of ₹47 lakh.