Cash-strapped Odisha asks departments to plough back money in bank accounts to treasury

Naveen Patnaik’s government  is facing a massive cash crunch and  has been able to mop up  only 45 per cent of the revenue collection in the last two months compared to same period of last fiscal due to Covid-19 lockdown

Facing huge shortfall in revenue collection, Odisha has asked government departments to route their money parked in bank accounts back to the government treasury to improve the cash balance to meet Covid-19 related emergent expenditure and other committed expenditure .

In a letter to the drawing and disbursing officers of different departments last month, the finance department said government money parked in bank accounts without authorization has to he ploughed back to the state government account. It said money in respect of closed schemes or schemes no more in operation for more than two years should be considered for this.

“As the tax and non-tax revenue is adversely affected, any parking of the state government money in bank accounts is not only affecting the cash balance of the State, but also having a negative carry on the interest accrued against such idle government money when compared to the cost of borrowing. The Covid-I9 related lockdown has affected the activities across all the sectors of the economy resulting in limited resource flow to the state exchequer. The state will have to discharge its committed liabilities and also finance Covid-19 management activities,” the letter said.

Odisha finance secretary AKK Meena said the departments were still in the process of compiling the money kept in bank accounts in respect of several schemes and the final amount would be known in next fortnight. “In case there would be requirement for expenditure in respect of any of the existing schemes in future, funds would be made available through rebudgeting under those schemes,” he said.

Meena said in the first two months of the current fiscal, Odisha has been able to garner only 45 per cent of the revenue collection compared to same period of last fiscal due to Covid-19 lockdown. In the two months, Odisha has managed to collect about Rs 1,700 crore revenue through mining royalty, GST and Inter-State GST. Even the mining revenue collection has gone down by almost 65 per cent compared to same period last fiscal.

“We expect the situation to improve from June onwards as industries have started operating. But we have to undertake austerity measures in the coming months as revenue collection is likely to go down,” he said. Compared to other States, Odisha was in a fiscally better position as it reported a fiscal surplus of Rs 9,509 crore in 2020-21 Budget.

In its 2020-21 Budget, Odisha had estimate total revenue receipts at Rs 1,24,300 crore, of which Rs 56,000 crore were to be raised through state’s own resources while the rest has to come from central transfers. But with the national economy facing contraction, officials said the central transfer will also take a major hit.

Finance department officials said the State may have to go for borrowings to fund its budgeted expenditures as well as committed liabilities like salary and pension.

source: hindustantimes