Southern States
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Kerala
Kerala adopts drastic fiscal measures
By Our Special Correspondent
THIRUVANANTHAPURAM, DEC. 11. The cash-starved State Government on Tuesday decided to go in for further belt-tightening and financial reforms and discipline in a bid to save its Annual Plan and future development programmes.
The measures, decided upon by a special meeting of the Cabinet here, include an immediate vacation of all stays on revenue recovery, a national savings drive and pending revision of various fees and charges for Government services.
The Chief Minister, Mr. A. K. Antony, told presspersons after the Cabinet meeting that the Government proposed to sign a Memorandum of Understanding (MoU) with the Centre on a reform-linked financial restructuring plan based on a medium term fiscal framework. These would include fiscal reforms, power sector reforms, public sector restructuring and budgetary reforms. The MoU was required for availing loans from financial institutions, including the Asian Development Bank, he said.
Mr. Antony said the details of these could be given out after another special meeting of the Cabinet scheduled for December 19.
The Chief Minister and the Chief Secretary, Mr. V. Krishnamoorthy, admitted that the Government had given stays on recovery of revenues totalling Rs. 30 crores or more in six months while the Plan expenditure stood at 27 per cent. The Cabinet had now decided to vacate all stays relating to sales tax, excise, motor vehicle tax and forest revenue collection exceeding Rs. 1 lakh.
The defaulters would be allowed remittance in instalments only if they remitted 50 per cent of the dues before January 1 and produced the receipts. A special drive would be undertaken for obtaining early decisions on all revenue-related cases before courts. The secretaries of various departments would discuss measures with the Advocate General separately, they said.
A special drive would be launched for national savings mobilisation with a target of Rs. 1,000 crores. The arrears in payment of incentives to depositors, totalling Rs. 30 crores, would be cleared by January 15 to attract fresh investments.
They said that the Cabinet had decided to increase various fees and charges for Government services which have not been revised earlier. It had approved in principle that the fees in various educational institutions, including medical and agricultural colleges, should be increased from the next academic year. The details would be worked out later.
A notification fixing fair value for land all over the State for stamp duty purposes would be issued in three months. This would improve revenue. Besides, bought in land in possession of the Government would be auctioned off.
Further, amounts in treasury public accounts, which had actually not been released for spending, would be resumed to the Government. However, money in such accounts related to Centre- sponsored schemes, externally-aided schemes, loans from financial institutions, schemes under the Award of Central Finance Commission and public sector undertakings would not be resumed. The State had lost Rs. 600 crores in Central assistance because money was not released in time for such schemes.
Mr. Antony said that the State could get out of the financial crisis only through drastic measures. The crisis, which had begun in 1997, had worsened last year. Though the situation had improved slightly now, the Annual Plan was in trouble. The next Five Year Plan too would be in peril unless urgent measures were taken, he said.
The State, he said, could develop only through reforms. Outdated laws too needed to be changed and for this purpose, a commission had already been set up. A special session of the Assembly would be convened next year to make the necessary amendments, Mr. Antony added.
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