Itanagar, May 6: Arunachal Pradesh government employees heaved a sigh of relief after the RBI withdrew its April 25 order stopping payments to the state government as it had been “overdrawn in excess of the arrangement agreed upon”.
After the letter sent by the RBI directing the SBI to stop payments to the Arunachal Pradesh government was allegedly “leaked”, panic broke out among state government employees — fearing non-payment of salaries — because the account of the Arunachal Pradesh government had been “overdrawn in excess of the arrangement agreed upon”.
The internal communication somehow managed to find its way to the social networking site Facebook which prompted sharp reactions from the people.
The Confederation of Service Association of Arunachal Pradesh had earlier appealed to state government employees for calm and not to panic over reports of a “financial crisis”. Salaries of government employees are usually paid on the last or the first business day of the month. For the month of April, however, salaries have still not been paid causing many to voice their anger.
That anger should subside now that the RBI has sent another letter to the Arunachal Pradesh chief secretary Ramesh Negi on May 2 wherein the RBI authorities stated that the state’s overdraft had been cleared and transactions can be reinstated.
The state finance secretary, Daulat Hawaldar, today said the treasury had been opened and salaries of government employees should be dispensed within the next few days.
While the RBI letter had left many panicking, the assistant general manager of the SBI Itanagar branch, Janardhan Hajowry, said financial overdrafts, although not desirable, are not completely out of line.
Earlier this year, there were reports that the Punjab government was taking overdraft from the RBI which were denied by the Shiromani Akali Dal-BJP government. In 2011, the Mamata Banerjee government in Bengal also faced an “overdraft situation”.
Explaining the reason for the overdraft, Hajowry said, “The state hardly has any funds of its own. Since most finances come from the Centre, overdrafts sometimes happen not just with Arunachal but also with other states.”
A source at the state treasury department had earlier said the state’s finances often run into deficit and an overdraft from the RBI account is not uncommon. However, what is rare is the central bank actually issuing a directive to stop all payments. Another source in the finance department said the state had gone into an overdraft of Rs 520 crore which prompted the RBI to issue the directive.
The Arunachal Assembly was dissolved on March 6 by governor Lt Gen. Nirbhay Sharma on the recommendation of the state cabinet which wanted simultaneous elections to save poll expenditure that roughly amounts to Rs 70 crore.