The budget for 2017-18 will have proposals for boosting infrastructure spending and due care will be made for retaining pensions and other welfare schemes, Finance Minister T.M. Thomas Isaac has said.
Briefing reporters after pre-budget consultations with traders and tax practitioners here on Wednesday, Dr. Isaac said the proposals for increasing infrastructure investment and leaving pensions and other schemes untouched would lead to a fiscal imbalance. The deficit may go up temporarily, but it would be made up in due course. There would be no knee-jerk reactions to the current financial crisis. The tax collection was expected to touch 20% by the next financial year.
The State was expecting a substantial revenue increase on the implementation of Goods and Service Tax. The Assembly would pass the GST Bill in April. It had been decided to take stock of the efficiency of the money spent for various schemes from the next financial year. The Finance Department at present diud not have a mechanism to predict the outcome of the spending at present. It has been decided to use a software for outcome budgeting from next year. The efficacy of implementing various schemes have to be gauged, he said.
Referring to the ₹7,000 crore tax arrears due to be collected from traders, the Minister said that traders have been directed to submit proposals for an amnesty scheme. The ₹7,000 crore arrears estimated by the tax personnel included penalty. Traders had disputed the sum and the idea was to end the legal dispute and collect tax worth around ₹2,000 crore from the traders.
Demonetisation had cast a grave impact on the economy. Plan expenditure was 8% less than what had been recorded in the corresponding period last year. Local governments were unable to pay the bills and could not transfer funds for various schemes, including Indira Awas Yojana, he said.
In his opening remarks, the Minister said that demonetisation had hit investments and there were no takers for bank loans despite the banks slashing the interest rates. This was a true reflection of the crisis States have not been permitted to raise their borrowing limit too, he said.
