Thiruvananthapuram: The state government has tightened treasury control by reducing the limit for clearing bills without restrictions from Rs 25 lakh to Rs 5 lakh. This restriction now applies to local bodies as well, meaning that payments for local bodies will also be impacted by the new restrictions. Any bills exceeding Rs 5 lakh will require approval from the finance department before they can be cleared. This may result in delays for bill payments, causing potential disruptions in state administration. A letter regarding the revised treasury control, issued by the additional chief secretary (finance) and accessed by TOI, has been distributed to all treasury officers.

The Centre had approved the state government to borrow an additional Rs 4,200 crore for Onam expenses. The total borrowing limit for the state in this financial year is Rs 37,512 crore, of which Rs 21,253 crore had already been borrowed by the first week of September. The remaining amount is planned to be borrowed between January and March of the following year as part of the last quarter. However, due to the financial strain caused by Onam expenses, the government requested permission to borrow an extra Rs 5,000 crore from this amount. The Centre approved a borrowing of Rs 4,200 crore in response to this request.

Given the worsening financial crisis, the state finance department is now worried about meeting payroll, pensions, and clearing the significant pending bills and arrears. Recognizing its inability to fulfill commitments outlined in the State Plan for the current financial year, the state government has decided to scale back the Plan to only essential projects. Consequently, a substantial reduction in the State Plan is expected for this year, with a cabinet sub-committee appointed to oversee this process. The cabinet has already approved the proposal to revise the State Plan.Implement the planned expenditure.