As Onam draws near, the Kerala government gets closer to its annual nightmare of rolling out festival bonanza to its staff, state pensioners and welfare pensioners, totalling to about Rs 4,000 crore. To address this, the state government may float bonds worth Rs 1,000 crore to weather the festival commitments in the first week of September.
The Kerala government had been in parleys with RBI to get clearance for floating the bonds, sources told FE. While RBI has more or less agreed to the move, there is an apprehension among the planners that this move add to the debt burden of the State. This would be the second bond of Rs 1,000 crore for the state, as in the beginning of the fiscal, the Kerala government had already taken a R1,000-crore bond plunge.
Besides the R4,000 crore commitment over welfare pensions and staff entitlements, the state government also owes R2,500-crore in arrears to the government contractors for works done. Already the debt-burden of the state stands at a staggering R1,14,121.38 crore. This constitutes 28.29% of the gross state domestic product (GSDP). The medium fiscal plan says that “despite high fiscal deficit in 2013-14, the debt/GSDP ratio was manageable and from 2013-14, further consolidation needs to be achieved.”