Temporary Relief for Kerala’s Financial Woes as Centre Allocates Rs 4000 Crores

The financial crisis in Kerala seems to have received temporary relief as the state has received Rs 4000 crores from the Centre, including a tax share of Rs 2736 crores and an Integrated Goods and Services Tax (IGST) share. This influx of funds has enabled the state to overcome overdraft issues and ensures that the distribution of salaries and pensions will proceed without delays. Additionally, the Finance Department is actively exploring other avenues to address the financial challenges, considering efforts to bring more funds into the treasury.

To bolster its financial position, the state government has taken measures such as increasing the interest rate on treasury fixed deposits with tenors of 91 to 180 days from 5.90 percent to 7.5 percent. This move is aimed at attracting deposits, and the enhanced interest rate will be applicable for deposits made between March 1 and 25. While this provides a momentary reprieve, the state still grapples with the need for over Rs 22,000 crores to overcome the financial crunch, stemming from reduced credit availability and diminished funds from the central government. The Finance Department is actively engaging with cooperative banks and government-run institutions to explore additional avenues for raising funds and managing the financial situation effectively.