The Kerala government has raised Rs 1,000 crore through the sale of 10-year bonds to fund its developmental expenditure, utilising the RBI auction platform, on Tuesday. This is the second time in a year the state went for the sale of 10-year bonds.
In February, the Kerala government had raised R1,000 crore through the same route. In the current financial year, the state government had picked up over R10,000 crore through the sale of 10-year bonds to deal with financial overstretch.
In a notification, the finance department said the funds raised from the sale of bonds would be spent on development activities. The state spends a big share of the non-plan expenditure on the public servants’ salaries, pensions and penal interest payments for loans taken earlier.
Kerala finance minister KM Mani will present the state’s budget on March 13 even as opposition plans to block him from doing so. This would be Mani’s 13th budget as the finance minister. The Kerala government suffers a public debt of R1.19 lakh crore as of March 31, 2014. The finance minister, however, insists the tax to Gross State Domestic Product ratio is down to 28% compared with 53%, five years ago.
The state’s finances are in bad shape, as the growth in tax collection had dropped to 10-12 % in last three years against a growth of 22% in 2009-10. KM Mani has been facing allegations that the drop in tax collection has been due to deliberate attempts of tax evasion. Also, the finance department had been issuing stay orders on pending tax payments, citing various reasons. Reports indicate due to legal challenges, the state government has not been able to collect pending tax dues worth Rs 3,000 crore.