Kerala Faces Economic Crisis as Treasury Slips into Overdraft

Kerala is grappling with a severe economic crisis as its treasury slips into overdraft, accumulating nearly Rs 2000 crores in debt. The state government is taking urgent measures to address the situation, putting a temporary halt on most treasury transactions, excluding salaries and pensions. The financial distress has forced authorities to issue verbal instructions to suspend the disbursement of retirement benefits, causing concern for individuals seeking these funds. If the situation worsens, the Reserve Bank of India may provide a ‘Ways and Means’ advance with a maximum limit of Rs 1,670 crores. However, exceeding this limit could lead to a critical scenario, requiring immediate action to mitigate the economic challenges faced by the state.

This recurring financial turmoil highlights the need for Kerala to implement effective fiscal management strategies to stabilize its economy and prevent further disruptions to essential services and public welfare programs. The government must explore sustainable solutions to address the root causes of the economic crisis, ensuring a more resilient financial system for the well-being of the state and its residents.