Kerala in financial turmoil; needs ₹10000 crore urgently
FollowThe White Paper on the financial situation of Kerala paints a grim picture with the state struggling to pay ₹10, 000 crores towards immediate liabilities with a treasury balance of just ₹1006 crores at hand. At the same time, the state needs another ₹5900 crores meet daily expenditures!
Presenting the White Paper, Kerala Finance Minister Thomas Issac said that the state is facing a big financial crisis with the figures showing a sharp fall in revenue mobilisation and a consequent rise in revenue deficit during the UDF rule. Extravaganza, unnecessary tax exemptions and dip in income from revenue added to the crisis, the minister said.
Issac denied the claim of UDF government that the there was surplus fund in the treasury when they handed over the power to the Left government. When the LDF government came to power, the treasury balance was only ₹1006 crore while the state needed ₹5900 crore to meet daily expenditures and ₹6300 crore to pay off immediate liabilities. "The state will have to pay ₹10000 crore towards immediate liabilities and short-term liability," the minister said.
A K Antony government in 2001 - 04 was successful in bringing down the revenue deficit from 4.5% to 2.8%. The LDF government continued to maintain the pace and brought it to 1.4%. If the trend had continued, the revenue deficit would have been a thing of past by 2016-17. However, during the term of the Oommen Chandy government (2011-16) revenue deficit shot up. If the current situation continued, the government will not be able to function as the deficit will cross 3.5% in near future. The government will not be able to meet its daily needs. The fiscal deficit also continued downward trend during the previous ministry, minister said.
Cash balance by the end of the term of V S Achuthanandan government in 2011 was ₹3513 crore. During the term of UDF, there was a steep fall in cash balance and the deficit was of ₹173 crores when the new government came to power.
The White Paper criticised former Chief Minister Oommen Chandy and Finance Minister K M Mani for mismanaging state revenue thereby leading the state to financial breakdown.
Current revenue deficit - ₹8199.14 crore
Current fiscal deficit - ₹15888.17 crore
Public debt - ₹ 1.5 lakh crore
Growth rate in tax collection during 2006-11 - 17.2%
Growth rate in tax collection during 2011-16 - 12.4%
Required growth rate in tax collection - 20%
Meanwhile, former Finance Minister K M Mani said that the White Paper presented by Thomas Issac is actually black. It failed to evaluate the actual financial condition of the state honestly. The white paper cannot be considered as a financial document but a political document, he said.
