Today's Paper

White Paper likely to moot steps to mop up resources

Mounting revenue deficit that has curtailed the borrowing capacity of the State and the limited options for mopping up resources to initiate a course correction may figure in the White Paper on the State’s finances set to be released by the government soon.

The White Paper is likely to propose to do away with the system of parking government funds outside the Treasury Savings Bank and improve its functioning as remedial measures. The government may also channelise the surplus liquidity capital in the Treasury Savings Bank, deposits in cooperative banks as well as that of Non-Resident Keralites, among other sources, for funding major projects.

According to Finance Department sources, substantial sums mobilised from the market by floating bonds on the premise of funding development schemes were used for meeting committed expenditure and the new government would have to explore such options to meet its needs.

Revenue deficit for the current year has been pegged at Rs.8,199 crore and fiscal deficit at Rs.15,888 crore. Both these heads are bound to swell in the coming years , undermining further the fiscal health of the State.

Medium-term liabilities which comprise the funding of flagship schemes and mega projects, pay revision arrears for college and university teachers, paddy procurement dues and market intervention expenses due to Kerala State Civil Supplies Corporation and outstanding subsidy for rubber growers, have been estimated at about Rs.5,000 crore.

The Fifth State Finance Commission award for local governments for the current years has been put at Rs.8,599.48 crore. The budgeted amount is only Rs.5,500 crore. The government would have to mobilise Rs.4,400 crore for implementing the recommendations in full. Immediate commitments to be honoured amount to Rs.6,000 crore. Most important among them are social security pension arrears of Rs.800 crore, land acquisition charges to the tune of Rs.250 crore, and farmers pension of Rs.160 crore.

While the State’s debt accrued to Rs.78,673 crore during 55 years from 1956 to 2011, it had doubled and touched a record high of Rs.1,58,410 crore during the past five years. Sales tax collection ha s stagnated at around 12 to 13 per cent against the 20 to 22 per cent achieved during 2006-11.

Inept resource management during the past five years and lack of a political will to implement additional resource mobilisation efforts cleared by the Cabinet in 2014 are being pointed out as the reasons which have deepened the crisis.