Kerala to take drastic fiscal measures

Thiruvananthapuram: The cash-starved Kerala state government has decided to go in for further belt-tightening and financial reforms and discipline in a bid to save its Annual Plan and future development programmes.

The measures, decided at a special meeting, include an immediate vacation of all stays on revenue recovery, a national savings drive and a pending revision of various fees and charges for government services.

Chief Minister A K Antony told presspersons here before leaving to New Delhi that the government proposed to sign a memorandum of understanding (MoU) with the Centre on a reform-linked financial restructuring plan based on a medium-term fiscal framework. These would include fiscal and power sector reforms, public sector restructuring and budgetary reforms. “The MoU was required for availing loans from financial institutions, including the Asian Development Bank.”

Antony said the details of these could be given out after another special meeting of the cabinet scheduled for December 19. He and chief secretary V Krishnamoorthy admitted that the government had given stays on recovery of revenues totalling Rs 30 crore or more in six months while the Plan expenditure stood at 27 per cent. The cabinet has now decided to vacate all stays relating to sales tax, excise, motor-vehicle tax and forest revenue collection exceeding Rs 1 lakh.

The defaulters would be allowed remittance in installments only if they remitted 50 per cent of the dues before 1 January and produced the receipts. A special drive would be undertaken for obtaining early decisions on all revenue-related cases before courts. The secretaries of various departments would discuss measures with the advocate general separately, they said.

A special drive would be launched for national savings mobilisation with a target of Rs 1,000 crore. The arrears in payment of incentives to depositors, totalling Rs 30 crore, would be cleared by 15 January to attract fresh investments.

They said the cabinet has decided to increase various fees and charges for government services that have not been revised earlier. It had approved in principle that the fees in various educational institutions, including medical and agricultural colleges, should be increased from the next academic year. The details would be worked out later.

A notification fixing fair value for land all over the state for stamp duty purposes would be issued in three months. This would improve revenue. Besides, bought-in land in the possession of the government would be auctioned off.

Further, amounts in treasury public accounts, which had actually not been released for spending, would be resumed to the government. However, money in such accounts related to Centre- sponsored schemes, externally-aided schemes, loans from financial institutions, schemes under the Award of Central Finance Commission and public sector undertakings would not be resumed. The state had lost Rs 600 crore in Central assistance because money was not released in time for such schemes.

Antony said Kerala could get out of the financial crisis only through drastic measures. The crisis, which had begun in 1997, had worsened last year. Though the situation has improved slightly now, the Annual Plan is in trouble. The next Five Year Plan, too, would be in peril unless urgent measures are taken, he said.

The state, he said, could develop only through reforms. “Outdated laws too need to be changed and for this purpose, a commission had already been set up. A special session of the assembly would be convened next year to make the necessary amendments.”