The Hindu : Front Page : Fall in receipts from savings scheme

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Wednesday, Jul 04, 2007
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Fall in receipts from savings scheme

Special Correspondent

T.M. Thomas Isaac says State facing big ‘ways and means’ problem.

THIRUVANANTHAPURAM: The State Government is headed for a severe ‘ways and means’ problem in the later half of this financial year due to an unexpected downtrend in receipts from the National Savings Scheme (NSS), Finance Minister T.M. Thomas Isaac has said.

At a press conference here on Tuesday, he said the State’s finances relied quite a lot on the borrowings possible from the NSS. This year’s Budget had put the expectations at the level of Rs.2,700 crore. However, if the trend so far during the year is any indication, no amount would be forthcoming from this source. In April and May the deposits into the NSS had come to Rs.625.9 crore and the withdrawals Rs.669.29 crore, putting the net inflow to the scheme at Rs.43.39 crore on the negative side. In fact, the downtrend had begun last year itself. The Budget of 2006-07 had placed the expected net deposits into the scheme at Rs.2,950 crore, but the ultimate realisation at the end of the year was only Rs.986.62 crore — just around 33 per cent of the estimation.

Dr. Isaac said certain new regulations and controls the Union Government had imposed on deposits in the NSS had badly hit the whole scheme. The Centre had banned institutions (welfare boards, trusts, cooperative societies, etc.) from depositing in the scheme and withdrawn the 10-per cent yearly bonus that used to be offered for maturing deposits in the monthly deposit plan. The Centre had also imposed a penal interest on deposits withdrawn before maturity period from the monthly deposit plan and senior citizens’ plan. He listed six other new restrictions that had contributed to the NSS downtrend.

Dr. Isaac said if the State did not appear to be in much of a problem in the matter of its ways and means position at the moment it was mainly because of advance utilisation of the borrowings permitted for the year by the Planning Commission. This year’s borrowing limit of the State had been fixed at the level of Rs.2,800 crore. The limit would be exhausted during the early phase of the year itself.

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