Thiruvananthapuram: Kerala Finance Minister T M Thomas Issac on Friday claimed that cash crunch due to demonetisation has affected development works, while the state BJP accused him of trying to dupe people by playing a political game.
In a Facebook post Thomas said the economy had been badly affected due to demonetisation and in order to overcome the economic slowdown, the state government would have to increase spending on various infrastructure projects by taking loans through Kerala Infrastructure Investment Fund Board (KIIFB).
Administrative sanction was given for projects worth Rs 4,000 crore announced in the last budget and schemes worth another Rs 4,000 crore would be sanctioned next month, he said.
"We will be able to withstand the recession created by Modi by raising investment of about Rs 20,000 crore in the year 2017-18," Issac claimed in the Facebook post.
However, note shortage would not affect functioning of KIIFB because banks have enough funds to extend credit. Not only that, interest rate is also coming down, he said, adding, "Kerala should be able to utilise this favourable condition through KIIFB."
He said an examination of causes that led to fall in government spending after demonetisation showed Rs 500 crore to Rs 600 crore on account of salaries and pensions were not withdrawn from treasuries.
There was a fall in government expenditure to the tune of Rs 1,119 crore in the 21 working days after November 8 compared to the same period in October, the minister said.
"This month there are funds in the treasury, but no cash. But, what surprised me is that though revenue has come down, there are funds for disbursing salaries. But it cannot be said now if there will be notes for distribution," the state finance minister said.
Hitting out at Issac, state BJP chief Kummanom Rajasekharan said his remark that there was no funds to disburse salaries last month proved that people were being duped as "he himself admitted now that Rs 500 crore to Rs 600 crore is still to be withdrawn on that account."
"Issac owes an explanation to the people for his remark that there are no funds to disburse salaries due to demonetisation. The time is over to cheat people by making political statements," he said.
"It is nice that the state finance minister admitted that there are funds in banks and also interest rate will come down," Rajasekharan said.
"This is only one of the benefits of demonetisation and I welcome the admission of Issac that the country is going to achieve financial security," Rajasekharan said.
However, the BJP leader asked Issac to retract from his move to take loans on the pretext that banks has funds.
"This will pave way for corruption. Instead, the state should utilise crores of rupees in funds given by the Centre.
Availing loans will only push the state further into deep debt," he claimed.
