Financial nightmare starts, RBI ban likely, Rs 400 Crores in arrears
Overdraft overshadows Ibobi's 3rd stint
Source: The Sangai Express

Imphal, April 08 2012: The third consecutive term of Okram Ibobi as Chief Minister of Manipur has started on an ominous note as the State Government has run into an overdraft of Rs 400 crore.

Possibly, the Reserve Bank of India may ban the State Government from drawing funds any time after April 19 .

An official source informed The Sangai Express that on March 31, the last day of the financial year 2011-12, an amount of Rs 700 crores was drawn for different purposes including payment of salaries for employees.

Withdrawal of this amount brought the State's account balance to negative, incurring an overdraft of Rs 400 crores.

Following intimation from the Reserve Bank of India about the overdraft, the State Government has taken up due measures to pay back the overdraft amount.

Significantly, there was a ban on any form of appointment in Government departments some years back.

This was relaxed following some improvement in the State's financial health in the last few years.

CM O Ibobi

Subsequently, a large number of Government employees were recruited during the last SPF Government.

In the meantime, the State Government took up many developmental projects.

However, the State Government's financial condition took a sudden downturn after recommendations of the 6th Central Pay Commission were applied to its employees and pensioners since April 1 last year.

Since then, the State Government has been spending Rs 200 crores thereby incurring a deficit of Rs 83 crores every month in paying salaries to its employees and pensioners.

Notably, the State Government has 65,000 regular employees.

While the new fiscal year of 2012-13 has commenced on an overdraft account, the Reserve Bank of India may possibly ban the Government of Manipur from drawing any fund after April 19 if the overdraft amount is not paid back within 15 working days.

It is reported that the overdraft amount grew to Rs 400 crores as Rs 150 crores which should be kept in the State Government's account was not transferred to the State account by the bank concerned.

As such, it is likely that the overdraft amount would be reduced if the amount of Rs 150 crores is transferred to the State account.

In view of the deteriorating financial condition, Finance Department has already prohibited release of any fund for Plan, Non-Plan or Central sponsored schemes.

However, the prohibitory order does not cover disbursement of salaries, payment of loan interest and bills for purchasing power.

Meanwhile, the Planning Department has initiated due preparations for the State's annual plan size for 2012-13 which has been projected at Rs 4680 crore.