Thiruvananthapuram: Kerala is staring at a serious financial crisis. Upsetting its budget plans, Kerala has registered a deficit of Rs 20,000 crore in its annual revenue generation. The main reasons are stagnant tax collections and the reduction in the ceiling set by the Centre to borrow.
With the finance minister's projection of a 30 per cent rise in tax revenue unlikely to materialise, the government would have to dump nearly half the schemes announced in the budget. At present the rise in tax collection is only 14 per cent.
Another setback came when the Centre cut by Rs 6,000 crore from the Rs 25,000 crore that it could borrow. The state government had announced during the budget presentation that it was expecting to generate Rs 65,784 crore on its own through tax revenue. However, according to a report of the accountant-general, only Rs 24,165 crore could be collected till September.
For the remaining period, the maximum it could collect is Rs 25,000, thus registering a deficit of Rs 16,000 crore on this count alone. With the GST compensation that it relies on to pay salaries and pension and its share of the integrated GST (IGST) for inter-state trade of goods and services withheld by the Centre, the state government is groping in the dark for finding funds to pay welfare pension and advance salaries that need to be distributed before Christmas. It needs Rs 5,000 crore to pay the pension and salaries this month.
The government has only one way left now -- take more loan. Meanwhile, representatives from the state's finance department will meet the Union finance minister on Wednesday seeking immediate release of its share of IGST.
Under the prevailing conditions, the treasury becomes empty once the salaries of government employees and the pension are paid. Rs 4,000 crore is needed for this purpose. This month's salary and pension were paid on time because funds were not allocated for other purposes.
Even though the finance department is providing funds to other departments that need urgent funds, the treasury is withholding even the compensation of farmers and victims of flood.
The finance minister is adamant that despite the financial crunch, there won't be any cost-cutting measures. Instead, the FM claims to reduce extravagance, which, ironically, in increasing by the day. There are no controls in opening new positions in education and health departments, ministers' foreign tours, splurging on political cases and buying vehicles for government departments.