More belt-tightening steps likely

The Gulati Institute of Finance and Taxation Studies.   | Photo Credit: S. MAHINSHA

The State government may opt for more belt-tightening measures to cushion the impact of COVID-19 on its revenue sources and to meet the expenditure surge in health and allied sectors.

Disbursal of salary, pension and debt servicing, the prime recurring commitments, may come up for review. Already a series of austerity measures have been initiated, but if the virus threat does not blow over in three or four months, the government may be forced to explore more options.

The Gulati Institute of Finance and Taxation Studies (GIFT), which studied the COVID impact on State finances, has mooted additional revenue mobilisation proposals. It has proposed to defer the disbursal of a component from those drawing pension above ₹20,000. Since the gap between the number of pensioners and employees is fast narrowing, a decision to defer a fixed tranche from 5.38 lakh pensioners is expected to offer relief to the government.

Finance Department sources said the government had not taken a call on the GIFT proposal, but if the crisis prolonged indefinitely, reducing the tax revenue to a trickle, such measures would become imperative.

Creation of posts

Well before the virus outbreak the creation of posts in aided educational institutions had come under the scanner. Since about 15,000 posts are created annually without properly gauging its financial implications, a proposal for amending the Kerala Education Rules was formulated and the Law Department is vetting it now. In the wake of GIFT’s recommendation to create posts on the basis of the actual workload, the proposal might be implemented, sources said.

The institute has mooted a debt swap scheme for reducing the yearly interest burden. Availing short-term loans is not a feasible option and the government could only consider long-term loans without any severe conditions. Hence, it may only tread cautiously on this score, sources said.

The proposals for reviewing non-Plan expenditure, streamlining capital expenditure, and redeployment of excess staff may be taken up soon, sources said.

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Printable version | Oct 27, 2021 7:08:18 AM |

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