State’s Use of Welfare Funds to Cover Daily Expenses Amid Fiscal Crisis

In the midst of a severe financial crisis, the state government is planning to tap into welfare funds to cover its daily expenses. It intends to withdraw Rs 1700 crores in this manner, with the funds expected to be transferred to the state treasury within the week.

Specifically, Rs 1200 crores will be taken from the Motor Transport Workers Welfare Fund, and Rs 500 crores will be drawn from the Toddy Tappers Welfare Fund Board. These amounts will be treated as short-term fixed deposits in the treasury.

Efforts have been made to obtain funds from other welfare boards, but many of them are also facing financial difficulties. Additionally, there is a pending Rs 1000 crores owed to the government by the Income Tax department, which is expected to be paid by the Beverages Corporation if received.

This decision by the government is primarily driven by the need to cover expenses related to the Onam festival and to prevent a shortfall of funds for other transactions. Currently, only about Rs 2000 crores remain of the loan sanctioned by the Central government for the state.

To manage Onam-related costs, the treasury transaction limit has been reduced to Rs 5 lakhs, and most bills, except those related to special Onam expenses, have been postponed. There has been no relaxation of control over the treasury. Nevertheless, government sources express hope that accessing funds from welfare boards will assist in meeting essential bills.

It’s worth noting that during the previous government’s tenure, it was common to request funds from welfare boards to address financial crises. However, when the Central government began counting such borrowings towards the state’s credit limit, the government was compelled to exercise greater caution.

Even in dire economic circumstances, the state cannot afford to rely on such temporary measures. However, if the withdrawn funds are returned to the welfare boards by December, it is expected that the state’s credit limit will remain unaffected.

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