Let Jose Cyriac , Bharath bhushan and chandrasekhar Save the state , let OC, Mani&co loot it and let Sudheeran remain a mute spectator… Fiscal instability was the rule in Kerala for quite a long time. The state started regaining the fiscal health through different means during the last one decade. Various dispensations adopted different strategies to achieve fiscal consolidation. Previous UDF government adopted an approach of squeezing the public spending; the worst effect of it was on Government employees. Remember the notorious GO during Antony dispensation and the united strike put up by Service unions. The effort was for fiscal consolidation, though the route was unacceptable. The next VS Govt adopted another strategy to regain the fiscal health by significantly enhancing the revenue of the state Government and to reduce the revenue deficit. That government, in which Dr. Isaac was the FM, has succeeded in reaching the target by enhancing the revenue by 19%annually, that too without raising the tax rates. Eventually the state has moved to fiscal stability, thereby we would have been able to spend the entire borrowed money on capital expenditure. What happened during OC dispensation is that revenue collection fell sharply, even below 9% growth rate, that too after tax rate hikes. The result is that Govt was forced to spend much more borrowed money on revenue expenditure. Towards the fag end of the 2013-14 Fiscal, the FM was forced to clamp too much fiscal regulations. Even the official statistics says the plan expenditure was only 67%. The department heads were asked to transfer credit their plan share in the treasury itself so as to reduce the net out flow. While considering the amount transfer credited in the treasury accounts, the plan expenditure shall be below 55%. Government has given directions not to accept Leave surrender claims and PF advance bills. There was severe cash crunch so the government was badly in need of deferring the expenditure. Government was waiting for the release of the first installment of Open Market Borrowing. On the 1st of April, for the first time in the history of kerala , the Govt moved for the loan of RS. 2500cr. The RBI sanctioned only Rs 1000Cr. That is why some restrictions are still prevailing, that is why the contractors bills are not being paid , and that is why some welfare pensions were not released even in the background of a general election. On 31 March, 2014, in the AN treasury denied to accept any bill and the elected representatives were forced to stage sit in front of treasuries. But the Govt never accepted that there is a fiscal crisis. Now the state government borrowed another 1000 Cr through open market borrowing. Even this won’t be enough to meet the immediate requirement. The paddy procurement arrears is 450 Crs. Salary and pension commitment for the current month shall be 2200 crores. If leave surrender and PF advance bills have to be honored, another 600-700 crs may be required. Arrears on contractor’s bills may be something around Rs 2500 crs. Atleast 350-400 crs may be required to clear the welfare pension arrears. The amount due to SUPPLYCO, CONSUMERFED,boards and corporations ? What shall be the quantum of money required for paying the plan share of the previous FY that have been transfer credited in the treasury? Now State cabinet admitted that there is financial crisis and appointed a three member panel to look into the issues and recommend remedial measures. Better late than never… The pre- 2000 situation was totally different from the present state of affairs. Those were the days of fiscal instability irrespective of the political party in power. But what happened now is that the total inefficiency and irresponsibility has derailed the fiscal consolidation path ,the state have been following for the last one decade or more and this will have serious implications for the state in future. This is evidenced by the hiked interest rate for the OMB we have taken now. The OC dispensation has taken the state back to the pre-2000 era for which Mani &co shall be held responsible by the history Let Jose Cyriac , Bharath bhushan and chandrasekhar Save the state and let OC, Mani&co loot it and let Sudheeran remain a mute spectator……
Posted on: Wed, 23 Apr 2014 03:39:43 +0000