Southern States - Kerala

LIC loan bails out Govt.
By Our Special Correspondent

THIRUVANANTHAPURAM, FEB. 14. A Rs. 200-crore loan from the Life Insurance Corporation of India (LIC) has just managed to help the State Government wriggle out of the embarrassment of keeping the treasury shut.

The Government was on the verge of being forced to stop treasury payments on Wednesday following the expiry of the overdraft period. Against a limit of Rs. 210 crores, the Government had drawn an overdraft of Rs. 310 crores from the Reserve Bank of India (RBI) this month.

The Finance Minister's office, when contacted today, said the LIC had released a loan of Rs. 200 crores to the State Government today.

Sources said that out of the total amount released by the LIC, the State could utilise only Rs. 100 crores for its immediate requirement of clearing the overdraft since it was already having dues to the tune of around Rs. 100 crores with the LIC.

Along with the Rs. 100 crores which could be spared from the LIC loan, the State Government was able to mobilise Rs. 210 crores more, received as Sales Tax during the course of this month to clear the overdraft with the RBI and thereby avoid freezing of treasury payments, sources said.

The assistance from the LIC came in the wake of an SOS sent by the Chief Minister, A. K. Antony, to the Union Finance Minister, Yashwant Sinha, on Wednesday. The Chief Minister's request was to help the State either through an LIC loan or by releasing an advance from the Plan share for next month. The State's expectation was that the Centre would extend an advance of at least Rs. 100 crores from the Plan share in view of the extraordinary situation here.

The ongoing strike by Government employees in the State is a major reason for the present treasury crisis.

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