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Journalism of Courage
After dragging the ADB loan offer into an ideological fight, the cash-strapped Kerala government is now looking towards an innovative borrowing option in the richer states.
In fact, Chief Minister V S Achuthanandan has written to Union Finance Minister P Chidamambaram seeking permission to borrow from other states in the wake of the fiscal crisis in Kerala. According to the letter, the crisis has been caused by the huge shortfall in small savings.
Confirming the move, Kerala Finance Minister Thomas Isaac told The Indian Express: “In the wake of the collection from small saving schemes falling short, the Chief Minister has suggested that the state be allowed to borrow from other surplus states…or the Centre can give us a special package to overcome the crisis”.
Though Isaac refused to comment further, Finance Ministry officials said borrowing from surplus states means interest rates higher than the 5 per cent they get from the Centre for interest now they get from parking the money in Central Government securities. “The state government is ready to offer higher interest rates, up to 7.5,” said an official.
The state had expected to raise Rs 3,000 crore through the small savings scheme. But it could collect only half the amount. While the wage revision for government employees calls for additional funds to the tune of Rs 1,500 crore, another Rs 190 crore is needed to pay pension arrears, and Rs 150 crore to provide rice at subsidised price for families below the poverty line.
