Thiruvananthapuram: Finance minister T.M. Thomas Isaac has bad tidings for the state on New Year. One, the 2017-18 Budget will not be presented in January and instead will be pushed to the first week of March or even later; plan utilisation, therefore, will be affected for the second consecutive year under the LDF dispensation. Two, salary and pension payments will be seriously affected in January.
The Reserve Bank of India has refused to provide any assurances on money supply to the state. The state has sought Rs 1,931 crore from RBI for the first 10 working days of the New Year. This includes Rs 1,425 crore for salaries and pensions, and '506 crore for social welfare pensions. RBI officials, after a meeting with the finance minister on December 29, said that at the most they would be able to release only 60 percent of what has been sought by the state. In such a scenario, money will be shown as credited in the accounts of employees and pensioners, but not enough will be available when attempts are made to withdraw it.
“RBI officials also told us that if more consignment of Rs 2,000 notes reach the Central bank in the first week of January, a portion would be transferred to the state’s agency banks like SBI, SBT and Canara Bank and not to the Treasury,” a top finance department official said.
“Additional money flowing to agency banks will not ease the acute shortage of currency as these banks have other huge commitments besides the salary and pension requirements of the state government,” the official added.
The decision to postpone Budget presentation, too, is the result of the uncertainty surrounding demonetisation. “We have no idea about the volume of central transfers in the post-demonetisation period. Further, there is no clarity on the GST compensation for states. Though 14 per cent has been agreed to, we are not sure whether it will be paid as a consolidated sum or as a statutory transfer as the states have demanded,” the official said.
Clarity on Central transfers will have to wait till the Union Budget, which sources said will be presented only in the first week of March. Result: Plan utilisation will be on hold at least till August 2017.
