State to enter severe financial crisis by January 2021
Thiruvananthapuram: It is observed that the state will enter severe financial crisis by January next year. The revenue loss during the pandemic is what has made the matter worse in the state. Currently, treasuries in the state are running in an overdraft of Rs 1400 crores. It is reported that the treasuries will become bankrupt if the overdraft amount is not repaid within 14 days.
The government has brought in regulations such as salary cut as the financial condition of the state is getting worse. The finance ministry is planning to cut salary from all employees. Although the government can save upto Rs 500 crores through salary cut, it will have to be repaid with interest later and that will become a liability.
Centre owes the state Rs 7000 crore as GST compensation amount this year. The state had rejected the centre’s proposal to borrow money as an alternative to this. It is estimated that GST revenue will come down by 30 percent this year. The study conducted by Gulati Institute showed that there will be a shortage of Rs 33,456 crores in the current financial year. Out of this, Rs 19,816 crore is the loss incurred through GST. The increase in social welfare pension and the distribution of free food kits increased the financial burden of the state.
The KM Abraham-led committee had recommended ending the salary cut of employees by September and to introduce a special income fund. It was also recommended to accept donations only from interested employees. However, the government decided to extend the salary cut by another 6 months.
The committee recommended starting income support fund from interested people who earned a salary of more than Rs 20,000 and from retired employees with a pension of more than Rs 37,500. It was pointed out that the employees should not be forced to make donations and that money could be collected from volunteers until August 2021. The committee also recommended fixing a lock-in period until 2023 to withdraw the money and to return the money in 4 instalments.