THIRUVANANTHAPURAM: There could not have been a more inopportune fiscal for plan fund utilisation to touch record levels. Utilisation has soared like never before, but in these initial stages of GST the state has found itself alarmingly short of revenue to not just sustain the aggressive plan growth, but also to pay salaries and pensions. The LDF government will have no choice, but to hold back its growth expenditure for the time being. Utilisation in the middle of the third quarter has crossed 42 per cent, which is considerably higher than the high of 28 per cent achieved in the 2012-13 fiscal. This accelerated plan fund utilisation is gobbling up the state’s resources that have worn thin as a result of the quirks of the GST regime.
GST and, the new Centre-State mechanism of sharing tax revenues, have emptied out the state’s coffers, at least temprarily. A high level of fund utilisation has thus become unsustainable. However, the finance minister’s immediate concern is to find the money to pay salaries and pensions on time. Reason why the finance department has imposed severe Treasury restrictions. The Treasury has been asked to halve its daily outgo to Rs 50 crore. It has also been asked not to pass bills above Rs 10 lakh, and to pass on costlier bills for consideration of the finance department. The Treasury controls will continue for two more months. As for plan development, a Planning Board member said there would be “managed fund release”.
In the pre-GST days, the RBI had credited the state’s share on the first working day. Now, the transfer of money has been shifted to the 15th of a month. “Since the state’s biggest outgo is during the first 10 days of a month, the delayed transfer has upset the state’s calculations. It is also an issue that the GST has not yielded the kind of dividends we had expected,” a top finance department official said. Compounding the problem, it is only once in two months that the Centre would pass on the compensation due to the states as a consequence of the GST implementation. Result: The state’s entitlement of Rs 1,000 crore will reach the state only by the last week of December. The state’s attempt to mobilise some revenue of its own, too, had not worked. Finance minister Dr T.M. Thomas Isaac announced an amnesty scheme to fetch Rs 2,000 crore. A source said he could manage less than Rs 500 crore.
The other big concern is that the state has almost exhausted its open market borrowing limit. The state could borrow three percent of its GDP from the open market. The ceiling for 2017-18 is Rs 20,400 crore. Already, Rs 14,000 crore has been secured, of which Rs 8,500 crore was borrowed during Onam. The problem is, the LDF had used up Rs 6,000 crore of its 2017-18 OMB quota during 2016-17 itself. This means, the state can borrow just Rs 400 crore more from the open market during the remaining part of the fiscal. This can be done only in January.
