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Kerala further slipped into a financial crisis as it went for an overdraft of Rs 100 crore last Friday. This is for the first time in last one decade that the state is availing itself of the OD facility. On Tuesday, the government also opted for the sale of 10-year securities to raise Rs 500 crore immediately to tide over the financial crunch.
The government has already borrowed Rs 6,900 crore this fiscal since there had been a serious drop in revenue collection in the last few months. The maximum permitted limit of borrowing for the state in 2014-15 financial year is Rs 14,000 crore and Kerala had already taken more than half of the limit.
The government is looking at raising the revenue collection through alternative routes. Chief minister Oommen Chandy had instructed official to opt for the non-tax route also. According to finance minister KM Mani, the government is toying with several options but and was yet to take a decision.
The government also plans to impose an additional cess of Re 1 /litre on diesel and petrol and the next Cabinet meeting is likely to consider the various proposals. However, the chief minister is not in favour of imposing additional cess as it would burden the common man.
The commercial tax collection has dropped roughly 20 per cent in the last four months and this made the situation more difficult.
Moreover, closure of foreign liquor bars across the state from September 12 is likely to put more stress on the state's exchequer. On average, the state's treasury gets Rs 150 crore on a monthly basis from around 700 bars. Mani admitted the loss in revenues from bar hotels would make the situation more difficult. "We have to consider alternative revenue generation sources, but this is a painful effort," he said.
According to the new liquor policy, 10 per cent of the outlets of the Beverage Corporation and the Kerala State Co-operative Consumers Federation will be closed from October 2. The state gets roughly Rs 8,500 crore through the sale of IMFL, which is around 15 per cent of the total revenue receipts.
No Serious crisis : CM
However, Chandy today denied reports on the state facing a serious financial crisis. He said the state was facing a financial crunch only, nothing more. The state could avail itself of the OD from the Reserve Bank and the same would be repaid within seven days.
Meanwhile, the finance department clarified that the current difficulty was not connected with the new foreign liquor policy announced recently.
The state was facing financial crunch as there is fall in revenue collection for the last few months. This was because of the general economic slow down in the country.
The department is expecting better tax collection in the coming months and there will not be a possibility of the closure of the treasury.
According to the Budget estimates of 2014-15, the finance minister has projected a revenue deficit of Rs 7,131.69 crore. As the revenue collection, especially the commercial tax collection, is in bad shape now, the gap between revenue and expenditure will be wider. A major chunk of the revenue is utilised for disbursing salary and pension of the government employees.
