Kerala on the brink of bankruptcy

By Our Special Correspondent

THIRUVANANTHAPURAM, JUNE 18. The Kerala Government virtually declared itself bankrupt and disclosed the options before it to tide over the situation in a White Paper released here on Monday.

Releasing the document after a special Cabinet meeting, the Chief Minister, Mr. A. K. Antony, said the State was in a debt trap and was on the brink of collapse. The Government had borrowed from all possible sources and it could find no more lenders.

Though the State had thus become a pauper, the Government was determined to improve the situation and make Kerala the leading State in the South in terms of financial stability. This would call for several unpopular measures, the Chief Minister said. The objective of the White Paper was to present the real picture of the State finances before the people and initiate a public debate on the bail-out options before the Government.

It said the duly-elected democratic Government was unable to perform its functions as a sovereign State. For the first time in the State's history, the Government was unable to honour valid and legal instruments drawn on it. So, it was important that immediate measures are taken to restore the public's faith in the Government.

The average monthly deficit faced by the State was now Rs. 170 crores. The annual deficit, Rs. 165 crores on April 1, 1998, had jumped to Rs. 2,045 crores by 2001. The Government would have to raise Rs. 2,100 crores through measures for additional resource mobilisation and savings in expenditure to meet part of the accumulated financial liabilities and the Annual Plan Outlay.

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