Thiruvananthapuram: The state government has tightened treasury control by lowering the limit for bill clearance without restrictions from Rs 25 lakh to Rs 5 lakh. This new restriction also applies to local bodies, meaning that their payments will be impacted. Under the recent decision, bills exceeding Rs 5 lakh will require approval from the finance department before being cleared. This change may lead to delays in bill payments, causing potential disruptions in government operations. A memo on the revised treasury control, issued by the additional chief secretary (finance) and obtained by TOI, has been circulated to all treasury officers.

The Central government has allowed the state government to borrow an extra Rs 4,200 crore for Onam-related expenses, increasing the total borrowing ceiling for the current fiscal year to Rs 37,512 crore. By early September, Rs 21,253 crore had already been borrowed, leaving the remaining amount to be borrowed between January and March of the following year. However, in light of the significant funds needed for Onam, the government requested to borrow an additional Rs 5,000 crore from this allocation. In response, the Centre approved borrowing Rs 4,200 crore.

Amidst a deepening financial crisis, the state finance department is grappling with salary and pension payments, as well as a backlog of bills and arrears. Recognizing its inability to fulfill commitments outlined in the State Plan for the current fiscal year, the government has decided to downsize the Plan, focusing only on essential projects. Consequently, a significant reduction in the State Plan is anticipated for the year, with a cabinet sub-committee appointed to oversee this process and the cabinet already approving the proposal to do so.