Finance Minister says it is for better fiscal management
The direction issued to local bodies to park their own funds in the treasury savings bank is not intended to overcome the State’s fiscal crisis but purely for effective financial management, Finance Minister K.N. Balagopal has said.
The Finance Department had last month issued a circular that required local self-governments to open accounts in the Special Treasury Savings Bank (TSB) within April 1, 2022, for the purpose. The order had apparently contravened an earlier decision of the Local Self Government Department allowing local bodies to maintain their funds in banks.
Responding to questions raised by several Opposition legislators, Mr. Balagopal said that maintaining unused funds in treasury accounts would enable better financial management. Currently, many local self government institutions maintained multiple accounts in cooperative banks and nationalised banks.
Claiming that the concerns regarding the move were unfounded, the Minister said the restrictions that were in place as part of the Ways and Means clearance system in Special TSB accounts would not be applicable for those held by local body. They would be able to withdraw funds whenever they desired.
His comments came a day after Local Self Government Minister M.V. Govindan replied affirmatively to a question on whether the order posed a challenge to the autonomy of local bodies. He had also said that the possibility of the decentralisation being adversely affected was being viewed seriously.
Pointing out that the legalities of the Finance Department circular was being studied, Mr. Govindan said that the provisions of the Kerala Panchayat Raj Act provided local bodies freedom to utilise their own funds and maintain them in government treasuries, post office savings banks, cooperative banks, or nationalised banks.
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