Hi people, I have worked in a government organization and they do not provide references/recommendations... If there any way across this hurdle?
I've never heard of a government agency not providing references. There's no single individual who will write you a letter? That sounds strange? Did you work for the CIA or something?

1) Are there any college that do not require LOR?
no.
2) Currently I am jobless. How should I portray this ? Is it okay to reveal it to the adcom?
You HAVE to reveal it to the AdCom, and no it's not a great thing. It would be much much better if you found a job before you applied.
3) Also as I have ~8500$ in savings. Plus ~8000$ more in loans... Where can I apply where I can complete my MBA with this money?
Nowhere. MBA cost anywhere from 60-220K$ For a decent two-year program (including living costs)
PS: GMAT 710; Work ex 2.1 yrs, 1.5yrs jobless ; Bachelor's Electronics; TOEFL 111
Good GMAT! Nice TOEFL! With 1.5 years joblessness you are gonna have a hard time though. I know you want the MBA to get a job, but it's a bit of a catch 22. Without a job, you can't get into a good MBA…