Finance Minister K. N. Balagopal has denied that Kerala is in the midst of a severe financial crisis, but said the State could find itself in trouble once the Centre stops the Goods and Services Tax (GST) compensation after June.
Talking to reporters here on Saturday, Mr. Balagopal rejected reports that the payment of salaries and pensions would be affected due to the present financial situation.
''However, the GST compensation would be discontinued after June 30. If the State is denied what is due to it, it can seriously affect development activities,'' the Minister said.
On Friday, the Centre had permitted Kerala to borrow ₹5,000 crore on an ad hoc basis, providing temporary relief to the State. Over the past few weeks, the State government had been in touch with the Centre after the latter put its foot down on off-budget borrowings and held off giving the nod for market borrowings in the first quarter of 2022-23.
Meanwhile, Minister of State for External Affairs V. Muraleedharan termed fiscal indiscipline as the root cause for the crisis currently faced by the State. The Centre had written thrice to the State seeking clarifications regarding borrowings but the State was yet to provide them.
The Centre had given the nod for ₹5,000 crore so that the State government could meet urgent requirements. Yet, the Chief Minister was alleging that the Centre was hindering the State's development, Mr. Muraleedharan said.
The State government was allowing trade union leaders to plunder public funds even as Mr. Balagopal was blaming the Centre for not permitting the State to go in for borrowings, Mr. Muraleedharan alleged.
