Borrows Rs 300 cr from open market; Officials blame delay in plan allocation
Facing a financial crunch due to delay in the annual plan allocations by the Government of India, the J&K Government Monday resorted to open market borrowing to meet the day-to-day expenses.
The Government functioning has taken a hit in the State and work on the development front has suffered as the coffers have run dry following “unwarranted” delay in plan finalization and its subsequent devolution by the Centre.
“The delay in plan allocation forced the Government to go for borrowing of Rs 300 crore from the open market today,” said a senior official. “We have made the borrowings through the RBI route at the interest rate of 8.9 percent after approval from the Union Finance Ministry.”
Trying to play down the financial crisis, the official said, resorting to borrowing was a “routine process” followed by the State.
“Though we would have preferred to defer it, the delay in plan allocation forced the move,” the official said.
However, another official admitted that the government functioning has “definitely” got affected owing to delay in plan allocations.
The State Government had in its budget for 2014-15 projected the plan size of Rs 11,900 crore including Rs 7300 crore main plan, Rs 4000 crore assistance under Centrally Sponsored Schemes (CSS) and Rs 600 crore assistance under the Prime Minister’s Reconstruction Plan (PMRP).
“The Government was managing the situation with the State’s own resources but it reached the point where we had no option but to explore available options to ensure there is no drastic effect on the day-to-day works,” said a senior official.
Terming the borrowings as “short term measure”, the official said, development plans of the State, having limited work season, for the current year would be “badly hit” if there will be further delay in the annual plan allocation.
“The State’s financial health is in bad shape and the liabilities at the treasuries have piled up to more than Rs 1500 crore,” the official said.
In a bid to tide over the situation, the Government has already authorized 50 percent expenditure of plan till the District Development Boards would take a call on the plan allocation for respective districts.
To a question, the official said, the State along with other States was expecting a decision by the Government of India on plan allocation after the maiden Budget Session of the BJP-led NDA Government ends during the 2nd week of August.
“But we fear there might be further delay as Government of India is yet to take call on setting up the Planning Commission which handles the subject,” the official said. “We don’t know whether the Union Finance Ministry will itself handle the matter this time or it will go to the Planning Commission.”
Another worry for the Government is that in case of enforcement of the Model Code of Conduct for the State Assembly elections scheduled in November-December this year, there would be almost complete development freeze in the state. “Once the Model Code of Conduct is enforced it will put a halt on decision-making and hence the already limited development season of J&K will be cut short,” the official said.