Kerala might still be under the retreating shadow of the global economic crisis with all its implications for the State's revenue earnings, but prudent fiscal management spread over the past four years appears to have done the trick for the government, sparing its blushes as the year-end rush of bills peaks.
The government anticipates a sudden outgo of roughly Rs.2,000-Rs.2,500 crore in the coming three days and, going by what those manning the State finances have to say, it has enough funds at its disposal to make ends meet and, perhaps, go into the new financial year with a little to spare.
It is not any sudden onrush of funds that has helped the government, but the absence of burdensome carryovers as used to be the case in the past, comfortable buoyancy in tax revenues and the strategy of staggered clearance of bills and commitments over the past few months. An anticipated 10 per cent shortfall in Plan fund utilisation is also being cited as a matter of relief.
Given the decision to unify the retirement age of State employees and teachers, the general impression has been that the government will have to keep around Rs.1,400 crore in reserve to pay the retirement benefits to some 18,000 retiring State employees and teachers. However, the Finance Department does not anticipate any such sudden outgo of funds on this count as the bills of the employees and teachers are likely to take a much longer time to get prepared and submitted.
The department had asked all departments in October to start preparing the pension papers. Information available with the department suggests that only 30 to 40 per cent of the papers have received final authorisation from the office of the Accountant-General, which will mean that only claims up to that level will have to be met in the coming few weeks.
Even here, the department does not anticipate any heavy outgo because there is the possibility of many opting to keep their retirement benefits in their treasury accounts on account of the greater credibility that the treasuries enjoy now and also to avail themselves of the higher interest rates on offer.
The government has already cleared all welfare pension and Public Works Department (PWD) bills relating to roads and bridges up to February. This is where its fiscal management has come to the government's aid.
The Left Democratic Front government had assumed office in 2006 bearing a heavy fiscal burden on its back, owing Rs.1,700 crore to PWD contractors, payments under various welfare schemes for periods extending beyond 24 months and 18 per cent DA to the State employees and teachers, to list a few. Its predecessor had also not made any provisioning to meet the wage revision commitments it had made. All these commitments were met in the past four years. The State's tax earnings grew by a healthy 14 per cent during the current fiscal, helping the government to meet its tax earning targets.