Last-minute revenue deficit grant payment saves Kerala from relying on overdraft

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Thiruvananthapuram: Kerala did not depend on the overdraft facility as revenue deficit grant of Rs 960 cr arrived from the union government. Monday reported a closing balance of Rs 550 cr in the treasury.

The state was staring at overdraft as the Ways and Means Advances (WMA) from RBI to run the day-to-day business had touched the limit.

Revenue deficits are constitutional finance support, provided by the union government as per the recommendation of the Finance Commission to manage the difference between income and expenditure of state governments. Kerala will get Rs 13,986 cr this financial year under the grant.

However, another Rs 2,000 cr would be required by month-end to clear all the bills, the finance ministry sources said. GST share of Rs 900 cr will arrive by month-end.

This month, the Onam festival has put additional burden on the government to spend more than the usual amount in the first half of the month itself, forcing it to take Rs 1,600 cr of the Rs 1,683 cr of WMA.

State finance department feels it may have to resort to treasury controls due to the financial crisis and limit on loans. Finance minister KN Balagopal, however, said Kerala has only financial constraints and no crisis. Former finance minister TM Thomas Isaac said even if the state has to reply on overdraft, it is not an issue. "Kerala had used all sources possible, including overdraft, in 2019-20 due to Covid-19 lockdowns. They are all legal. There is nothing to worry," Isaac said in a Facebook post. Borrowings of states are within the stipulated limit set by the union ministry and RBI.

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