THIRUVANANTHAPURAM: Treasury curbs in place since November 16, which have imposed severe restrictions on the flow of funds to various development projects, will be lifted by January 15 next year. Funds meant for local bodies, which were temporarily blocked, will be released urgently. Contractors, too, will be paid their bills for the work already carried out. “However, except for welfare activities, we will continue to maintain strict financial discipline,” finance minister Dr T.M. Thomas Isaac said here on Friday.
The sudden relief has come about after the Centre has restored the state’s open market borrowing limit for the 2017-18 fiscal. The state has now been allowed to borrow Rs 6,200 crore more in the next three months. Though the state could borrow Rs 20,000 crore from the open market this fiscal, the Centre had recently capped the borrowing limit at Rs 14,000. The Centre’s reasoning was that the state had enough money in its Treasury Savings Bank. This is the first time that the Centre had raised such an objection.
The TSB, in fact, was sitting on a treasure, Rs 13,000 crore, which theoretically made further borrowing unnecessary. The Finance Department promptly indulged in a book-keeping exercise that cut the TSB flab by Rs 6000 crore.
“Most of the Rs 13,000 crore in the Treasury belonged to various departments,” Dr Isaac said. “Since many projects were delayed, the money will be parked in the concerned Department’s TSB account. We asked these Departme-nts to take out deposits more than Rs 10 crore from the Treasury,” Dr Isaac said here on Friday.
The State Government was also able to convince the Centre that a good part of the money in the Treasury was only on paper as the projects for which the money was intended had not yet taken off; funds are transferred to the accounts of departments only when they submit the bills.
From now on, the Finance Department will not encourage more flow into the Treasury. For instance, earlier MLAs were asked to park money from their area development funds in the Treasury and, as incentive, were assured that more than double the amount will be spent in their constituencies. “Such schemes are now off,” Dr Isaac said. However, the finance minster said that the TSB would still be kept attractive for government servants.
NO LET UP IN RECESSION
The increase in borrowing limit is only temporary relief. “This, of course, is not enough to meet our needs,” Dr Isaac said.
He said return of Malayalis from the Gulf was affecting spending, and that this was showing in poor tax collection.
“The growth in sales tax on petrol is 10 percent. But if one takes into account the fact that petrol prices has gone up by 10 percent, there is no growth at all. The growth in registration and stamp duties, too, is just 10 percent,” the finance minister said. The GST growth, if the Centre’s compensation of 14 percent is also considered, might touch 14 percent. “But we had budgeted for 20-25 percent growth in taxes,” he added.
However, Isaac said that motor vehicles tax showed unprecedented growth of 22 percent. “The action taken against a couple of big names who had registered their vehicles in Puduchery seems to have sent the right signals,” Isaac said.
“We have also drawn up a list of 5000 people who had registered their vehicles outside the state in the last five years,” he added.
