Tough challenge for Chandy

There are political compulsions, but he cannot be liberal with sops in budget

Chief Minister Oommen Chandy would have to do a delicate balancing act while presenting the last budget of the United Democratic Front (UDF) on Friday.

Poor resource mobilisation and a mounting debt burden are the major concerns of the government weighed down by political uncertainties. The current situation does not afford the Chief Minister the leeway to be liberal in offering sops in the poll-eve budget. But he cannot overlook political compulsions either.

Resource mop up

The government has to mop up resources for footing the revised salary bill of government employees, teachers, and pensioners amounting to Rs.7,200 crore, honouring other committed expenditure such as debt servicing and maintenance of current assets. He also has to be on guard against hurting voter sentiments and meeting the expectations of a wide spectrum of people, ranging from housewives to rubber farmers.

According to Finance Department sources, the next government has the tough challenge of meeting the extended deadline of 2017-18 for wiping out the revenue deficit.

The steep rise in public debt is a major issue which continues to remain unaddressed. When the Left Democratic Front (LDF) government demitted office, the public debt amounted to Rs.45,929 crore. As per the latest estimates, there is a three-fold increase to Rs.1,53,759 crore.

The capital expenditure during the tenure of the LDF government had been pegged at 33.15 per cent, but it has slipped to 21.79 per cent now. Similarly, the average increase in revenue expenditure has increased from 13.96 per cent during the LDF regime to 19.93 at present.

This situation warrants major intervention and tough decisions to rein in the debt and revenue expenditure. But this should not be used as premise for cutting posts in government and the government withdrawing itself from the service sector.

The only saving grace is that the 14th Finance Commission has extended the deadline for effacing the revenue deficit from 2014-15 to 2017-18. The commission has also sanctioned Rs.9,650 crore as deficit grant. The government should have the political will to use it prudently and also take steps to augment revenue resource mobilisation. A set of proposals worked out and cleared anticipating the financial crisis had to be either shelved or dropped due to a variety of reasons, mostly political. The steep fall in rubber prices and dip in foreign remittances are also major challenges that call for timely remedies.

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Printable version | Jun 2, 2020 5:27:19 PM |

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