The Hindu : State's financial position precarious, says BJP MLA

Online edition of India's National Newspaper
Wednesday, May 08, 2002

Southern States

Southern States - Karnataka

State's financial position precarious, says BJP MLA

By Our Special Correspondent

Bangalore May 7. The financial position of the State is so precarious that the Government will, perhaps, not be able to pay the salary of its employees and also the legislators for the month of June, according to the BJP MLA, A. Ramdas.

The monthly salary bill of the employees was about Rs. 1,000 crore. Since it was difficult to mobilise the amount, the Government had issued an order making General Provident Fund (GPF) compulsory for the officials from June 1 to save Rs. 240 crore, though the GPF scheme was optional. It was also planning to enter into an agreement with a television company for an on-line lottery to mop up Rs. 100 crore a year, he said.

Mr. Ramdas, who was addressing a press conference here today, said the Government had issued instructions to the treasury to make payments only towards salary and pension bills and not to honour any other bill for more than Rs. 1 lakh.

Releasing a letter sent by him to the AICC President, Sonia Gandhi, to disprove her claim that the Congress-ruled States were performing well, Mr. Ramdas said the detailed account furnished by him along with the letter proved that the State was on the verge of bankruptcy.

The revenue deficit, which was Rs. 62 crore in 1995-96, had gone up to Rs. 1,215 crore in 1998-99, and Rs. 2,325 crore in 1999-2000. It had decreased to Rs. 1,862 crore in 2000-01 mainly because of lower revenue expenditure under social services and general services. By the end of the year, the deficit was likely to reach Rs. 3,006 crore, he claimed.

Referring to the public debt, Mr. Ramdas said it was Rs. 12,455 crore at the end of 1998-99, and the repayment of principal and interest accounted for 82 per cent of loans received from the Centre during the year. The debt was Rs. 15,147 crore the following year, and the repayment of principal and interest exceeded the fresh loans received from the Centre by 162 per cent. During 2000-01, 87 per cent of the total receipts went towards revenue expenditure, leaving very little for developmental activities.

According to Mr. Ramdas, for the first time there was no cash outflow on subsidies or infrastructure either to the Karnataka Power Transmission Corporation Ltd. or small industries. On the other hand, it was accounted for as book adjustments. Further, salary had not been paid to the staff of aided institutions for the past two months.

A circular was issued on March 25 stating that heads of departments should not make any re-appropriation for sums above Rs. 15 lakh as the State was facing a financial crisis.

He expressed surprise that the Government had no knowledge of the funds received by several organisations directly from international agencies, or the purpose for which they were spent. The Government had admitted this in a letter to the CAG, he added.

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