Kerala has managed to tide over the overdraft crisis, but exposed its addiction to liquor revenue which it wants to get beyond in a controversial new policy shift.

The State Government dipped into the deep pockets of monopoly dealer Kerala State Beverages Corporation to draw Rs 300 crore in advance out of the tax revenue.

Adequate funds

This, along with the proceeds from the latest debt raising exercise of Rs 500 crore, ensured adequate funds in the exchequer to help the Government tide over the crisis.

Official sources confirmed that the overdraft exposure was Rs 253 crore on Friday last, which had been paid back to the Reserve Bank of India yesterday.

Alongside, it repaid the Rs 536 crore that it had borrowed from the apex bank in Ways and Means Advances.

The normal flow of tax revenue from traders is expected to start from today after a break of four days during the Onam week-end.

The bunching of closed days, though not unexpected, and an outgo of Rs 2,500 crore in advance salaries and pension had put pressure on an already tight finances.

Emergency situation

This is what had led to an emergency situation in which the State Government found itself slipping into an ‘overdraft’ after exhausting the Ways and Means facility.

This position may have been reversed, but could come to haunt the exchequer since it depends on market borrowings even to defray day-to-day routine expenditure.

The State Government has raised almost half of its allotted quota for the entire financial year through borrowings from the market in the first half-year itself.

The schedule of borrowings provides for a tranche of Rs 1,000 crore every month, but the outgo from the exchequer is at least three times this limit.

Revenue lag

The normal outgo are Rs 1,400 crore in salaries; Rs 750 crore in pensions; and Rs 700 crore in interest payments.

These are hardly productive in nature either and leave hardly anything for capital or Plan expenditure.

At the latest count, the growth in revenue expenditure is assessed at 20 per cent, while that in revenue income lags it at 12 per cent.

This mismatch is also affecting the State’s fiscal equilibrium. The exchequer had yesterday announced that it is raising treasury deposit rates for individuals to nine per cent to attract public funds and beef up its holdings.

This follows a recent order in which public sector undertakings were directed to shift their deposits with commercial banks into the treasury at eight per cent.

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