The Reserve Bank of India has banned all transaction of funds from the account of Manipur Government with effect from June for having overdrawn in excess of arrangements agreed upon with the bank.
On Tuesday, Anita Kumari, Assistant General Manager of RBI, in a statement to the Chairman, State Bank of India (SBI) has asked to stop payment to the Government of Manipur with effect from June 12 and conveyed the same to its branches engaging in financial transaction with the state (Manipur).
“The account of the government has been overdrawn in excess of the arrangement agreed upon with the Reserve Bank of India. It has therefore been decided as per extant procedure, to stop payments of government of Manipur with effect from June 12.”
A government source said that the state faces overdraft of Rs 247.48 crore, exceeding 36 days in a quarter, as per the scheme of ‘Ways and Means Advances’ to state government for the year 2010-20.
Taking up austerity measures, Manipur Government has put on hold any recruitment process currently undertaken by any department with immediate effect from June 12.
Chief Minister N Biren Singh has convened a meeting at his office secretariat this evening to discuss the financial crisis.
According to noted economist of the state, Professor Amar Yumnam of Manipur University, the prevailing situation will eventually decline administrative performances as the immediate consequences will be borne by the state government employees.
Manipur Government will struggle to pay salary, pensions, besides transactions of bills.
“Without even a strike, this failure to pay salaries is enough to demoralise the employees leading to the decline in their performances,” said Yumnam.
He contended that the government should have anticipated the financial crisis two months back for it was also reflected in the CAG report.
The professor sees intervention by the central government in the form of loan to the state as the only immediate solution. However, it is easier said than done for it could set negative precedence, he asserted.