Kerala govt reinstates treasury curbs; Approval required for Bills over ₹5 lakh

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Thiruvananthapuram: Following Onam, the Kerala government has reimposed strict restrictions on the treasury due to severe financial strain. Bills exceeding Rs 5 lakh will not be cleared, a sharp reduction from the previous limit of Rs 25 lakh. During this restriction, any payments above the threshold will require either ways and means clearance or prior approval from the finance department.

It has been specifically stated that the Rs 5 lakh limit applies to local bodies. These institutions typically commence their project activities in the second half of the financial year, and as a result, the current restrictions could lead to the cancellation of several projects.

For the first time, the government has also imposed restrictions on the bill discounting system, which allows contractors to clear bills through banks when the government is unable to pay them directly. Previously, contractors could receive 90% of the bill amount through banks, but this has now been reduced to Rs 5 lakh. This will also apply to contractors working with local bodies. The government will pay the banks later, with the contractors bearing the interest costs.These restrictions place local bodies and contractors on a tightrope. There will also be delays in the disbursement of benefits across various departments.

Earlier, the limit for clearing bills was Rs 5 lakh, which was raised to Rs 25 lakh in June this year. However, due to the ongoing financial crisis, the treasury has reverted to the previous limit. The state has Rs 1,200 crore left to borrow until December, leading to the imposition of these strict measures.

Kerala govt reinstates treasury curbs; Approval required for Bills over ₹5 lakh added by on
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