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Kerala Finance Minister Thomas Isaac has demanded the Centre to allow the state government and PSU employees draw up to the equivalent of their salary from banks and treasures during the first 10 days of December.
In a letter to Union Finance Minister Arun Jaitley, he said that the Rs 24,000 limit on drawals should be relaxed during the first fortnight of the month to help the 5.50 lakh government employees and pensioners, contract and daily wage workers.
A large section of the daily wage and contract employees draw their wages in cash. Necessary changes should be made in the notification on demonetisation to avoid hardships to such sections.
A majority of the employees, particularly of the Class III and IV grade, and a very large proportion of the pensioners settle the outstanding credit raised for routine expenses during the previous month in the first fortnight of the succeeding month. Hence the critical need for assuring needed liquidity during the period.
Isaac told newspersons here that the disruption in cash flows on account of demonetisation would have a debilitating impact on the State’s economy.
Already there is a dip in remittances from NRIs who are sceptical about depositing funds in the banks and prefer to park them abroad.
This is expected to affect trade, construction and other sectors and the growth in the current quarter could plummet to 4 per cent from a targeted 7.5 per cent, the minister said.
He doubted if demonetisation would yield the projected results. The rich do not keep currency but invest in gold or real estate to cash out at the earliest opportunity. The current environment would otherwise encourage currency hoarding, he warned.
The state government would resist any move to destabilise the cooperative sector and work out an alternative plan in the best interests of the depositors.
The minister suspected that the current crisis is for the longer haul; it would take at least six months to print new currency notes.
He accused leaders of the state BJP unit of cheating the people of Kerala. He rejected their criticism against the State Assembly passing a resolution demanding to ease the woes of the people following demonetisation.
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