On election-eve, the Kerala government has managed to wriggle out of a treasury crisis as the Reserve Bank of India (RBI) looked into the state’s plea to float a R2,000-crore worth bond, sanctioning a R1,000-crore float.
The Centre has also come to the timely aid of the state groping for cashflows to pay up its monthly bills by releasing R600 crore from Kerala's entitlement of Central taxes. Sources in the state finance ministry told FE that, on Wednesday, in a gesture of scraping the bottom of the barrel, the state government had even transferred R50 crore from its bank deposits to the treasury.
Salaries, pensions and interest payments are 32.4%, 16.6% and 13.47% of the state's revenue expenditure, respectively. Annually, these commitments together constitute as much as R36,822 crore in 2013-2014.
In view of the urgency of the payment commitments, the state had requested cash transfers from the R1,000-crore Devaswam Board, which controls the revenue of majority of Hindu temples, but this was declined. State cooperative banks in Kerala were also hesitant to sacrifice the interest differential and help out.