Kerala finance minister doubts whether banks can deal with pay day rush

He has added that the state budget would not be tabled in January

Kerala finance minister doubts whether banks can deal with pay day rush

A day after a Malayalam daily reported Kerala Finance Minister Thomas Issac as saying that the state government does not have the required amount to disburse salary to employees in January, the Finance Minister on Friday said the salary disbursement will not be disrupted in the state as it will be credited to employee’s bank accounts, but doubt if the banks have enough cash to deal with the pay day rush.


He added that the state budget would not be tabled in January.

It would be postponed to February end or early March since the state needs to evaluate the extent of the demonetisation impact as well as the Union Budget, a report in Mathrubhumi News quoted him as saying.

The decision was made after the receiving a recommendation in this regard from the Finance Secretary.

He reportedly said people may not be able to withdraw money from the accounts because the banks do not have enough cash to meet the requirements.

The state needs a total of Rs.1,400 crore to give salary to its staff a month, but the RBI representative has conveyed that they would not be able to transfer this much amount.

The Union Budget for this year has been advanced to February 1.

Normally, the State presents its budget in March. However, this time, the State government had planned an early presentation of the budget in January to complete all budget-related formalities, including subject committee discussions and passing of appropriation bill, well before the start of the new fiscal.

Apart from demonetisation impact, the government is also concerned over the lack of information on Central plan allocation and GST compensation,
according to a report in The New Indian Express
.

Earlier, the Planning Commission in consultation with the State Planning Board used to give a clear picture on Central assistance for the State and, hence, the State could fix the plan size.

However, Niti Aayog, which has replaced the commission, has put an end to the practice of consultations on Central assistance. Hence, the State is now forced to wait until the Union budget to know the exact volume of the funds allotted by the Central government.