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The proceeds will be utilised for financing the developmental activities in the state. The Reserve Bank of India will sell the securities through auction tomorrow. The cut-off yield determined at the auction will be the coupon rate and the interest will be paid twice in a year, it stated. The move comes as the state has been facing a drop in tax revenue collection in the last three months.
Due to weak financials, the state government has asked Centre to raise the limit for taking loans from the current 3 per cent of the GDP to 4 per cent. The finance department has already directed to control the expenses of various departments and instructed not to create fresh posts and also to regulate fresh appointments. Various departments had created around 15,000 new posts in last two years.
Senior officials of the finance made a presentation on the state’s current financial situation before the Cabinet recently. The Cabinet asked the chief secretary to discuss revenue generating measures with various department heads and submit a report next week. The measures would be announced after the next Cabinet meeting, scheduled on October 10.
At his post Cabinet briefing recently, Chief minister Oommen Chandy said: “We wish to increase revenues without taxing the people. There will be no cut in the Plan expenditure. But certain measures will have to be taken to cut non-plan expenditure. The UDF government after coming to power, had created 15,000 posts involving a financial commitment of Rs 460 crore.However, there will not be a ban on recruitment.”
It was learned that most of the ministers had objected to measures to cut down expenses, especially a ban on recruitment.
Under the current stipulations of the Centre, Kerala can avail itself of Rs 12,000 crore as public debt in this financial year. The state had already taken Rs 6,200 crore.
The tax collection dropped 2 per cent during August when compared with July. Kerala has to maintain 16-17 per cent growth in commercial tax collection during this financial year for meeting the budgetary commitments, but the actual growth was at 11 per cent only.
The state government has to appoint a new Pay Commission in line with the Centre as the pay revision is due in next July. It is likely that the government will appoint a Commission before the announcement of Parliament elections due next year.
