Chhattisgarh eyes state entities’ extra funds to shore up funds

A January 20 order launched by the Finance Division, and signed by Particular Secretary (Finance) Sharda Verma, asks CEOs and MDs of 20 completely different boards, authorities and firms to deposit the excess quantity of their respective financial institution accounts into the federal government’s Ok-deposit. These 20 firms embody the State Police Housing Company, the Khadi and Gramodyog Board, State Advertising and marketing Company, Drinks Company, the State Industrial Growth Company, State Mineral Growth Company, and the Chhattisgarh Madhyamik Shiksha Mandal, amongst others. Whereas a few of these boards are fully depending on state authorities funds, others obtain funding beneath varied schemes of the Central authorities too. The state might be taking a look at a deposit to the tune of Rs 100 crore from these firms, the sources mentioned.

A Ok-deposit is a civil account maintained by state governments to maintain funds with out incurring any curiosity value. Fund steadiness within the Ok-deposit helps states current an image of solvency and creditworthiness.

Acknowledging the order, officers of the state authorities mentioned the choice was taken for higher regulation of funds. Sustaining that the state’s monetary situation “is superb in any other case”, the Finance division mentioned that “the board/company/authority can withdraw the cash from Ok-deposit with the Finance division’s approval as and when they should make a cost”. This transfer, officers imagine, will guarantee a further test by the CM workplace on the firms’ utilisation of funds since CM Bhupesh Baghel additionally holds the Finance portfolio.

Responding to queries, the state Finance division advised The Indian Specific, “(The) Accountant Common Chhattisgarh has identified to State Authorities that among the public sector entities (board/company/authority) of State Authorities have drawn the funds from finances and have parked the cash into financial institution accounts. That is violation of provisions of the Finance code, which clearly states that no cash needs to be drawn from the Consolidated Fund in anticipation of expenditure and it needs to be drawn solely when the cost must be made in lieu of service, work, procurement and so on. Drawal of cash prematurely adversely impacts the funds of the State and needs to be prevented to take care of fiscal self-discipline. So the instruction has been issued solely to make sure higher compliance of guidelines and rules.”

Regardless of the Finance division stating in any other case, Chhattisgarh has been going through a monetary crunch since 2020. Within the pandemic yr, the division levied strict restrictions on expenditure.

In a letter to Union Finance Minister Nirmala Sitharaman in November final yr, Baghel had sought monetary assets for Chhattisgarh.

In response to an annual research of state funds by the Reserve Financial institution of India, Chhattisgarh’s deficit noticed a spike in 2019.

Whereas the income deficit of the state was a damaging 0.2% of the Gross Home State Product in 2018-2019, it rose to 2.8% of the GDSP in 2019-2020. Equally, the gross fiscal deficit within the state rose from 2.7% of GDSP in 2018 to five.2% in 2019. The state’s downside is compounded by the constantly rising acreage of rice farming and a further weight of Rs 700 per metric tonne that’s being given as MSP to farmers beneath the Nyaya scheme. Officers say extreme prices in the direction of varied Cupboard-rank positions to accommodate factions within the ruling Congress celebration have additionally been a drain on the exchequer.

In the meantime, the order has left officers of Boards, that are depending on authorities grants, perplexed. “We anyway haven’t had a lot enter as a result of pandemic, and now this order means we must surrender our fallback cash… This cash is to not hold the federal government solvent, however to present again to the general public when it comes to infrastructure and providers,” a member of one of many 20 Boards mentioned on situation of anonymity.

To assist states’ of their funds, the Centre had shared two advance installments of their month-to-month devolution. On January 20, the Centre launched Rs 3,239.54 crore, comprising one advance installment of tax devolution to the state authorities. In November, an identical quantity was launched towards the month-to-month installment of Rs 1,619.77 crore. —With inputs from Sunny Verma, New Delhi