Finance minister T M Thomas Isaac said in the Assembly on Monday that the 30 per cent cut in plan funds that could be imposed this fiscal would not be applicable to the local bodies.
The minister was responding to the opposition charge that the functioning of the local bodies in the state had come to a standstill. “As I have already stated in the Assembly before, we might go for a plan fund cut and we have asked government departments to reprioritise their development projects. But such an instruction has not been given to local bodies. Last year, too, when there was a cut of 20 per cent, we had not slashed the plan funds of local bodies,” Isaac said.
The finance minister also said that the government would desist from imposing the 30 per cent cut in plan funds if two things happen. One, a fiscal stimulus package by the centre. “If the Centre decides to increase its fiscal deficit and announce a real stimulus package, it would be a big relief to the state. We are waiting for it,” Isaac said.
Two, if the traders submit their annual returns by the end of November this year. Isaac had repeatedly said that the absence of annual returns had prevented tax officials from detecting sales suppression and excess input tax credit claims. The Centre had repeatedly kept postponing the last date for submitting the annual returns. The latest deadline is November 30.
Isaac said that the Centre itself had informed Kerala that its GST collection had improved vastly. “During a video conference last week with the Prime Minister's Office we were told that our GST growth was 20 per cent without taking into account the ad hoc settlement that was already done last fiscal,” Isaac said.
The annual returns are a must for the GST Department to take full advantage of the growth in tax collection.
According to the Finance Minister, the primary reason for the slow down is the precipitous fall in central assistance. The State's borrowing limit has been slashed by Rs 6645 crore. Central assistance, he said, would come down by Rs 5370 crore. The state's share of the centre's divisible pool is also expected to fall by Rs 5623 crore. There will be a fall in non-tax revenue by over Rs 1800 crore. Together, Isaac said there will be a shortfall of nearly Rs 20,000 crore.
Congress MLA K C Joseph, while seeking leave to move an adjournment motion on fund-starved local bodies, said that the funds for spillover projects and queued-up bills (those submitted before this fiscal) were given from the plan funds for this fiscal.
He wanted an assurance from the Finance Minister that the money for spillover projects and queued bills, Rs 837.66 crore, would not be subtracted from this fiscal's plan allocation for local bodies.
Thomas Isaac promptly gave the assurance. He said the government was even willing to provide 20 per cent additional funds for panchayats and 30 per cent for municipalities and corporations for spillover projects.
K C Joseph said the government should pass an order to this effect. Isaac said that money would be provided as and when local bodies submitted bills for completed projects. “Additional authorisation will be granted once the local body submitted bills for the completed work. You cannot provide funds for a project that has not started,” Isaac said.
The Finance Minister was perhaps banking on the fact that no local body was going to achieve 100 per cent utilisation. Last fiscal's utilisation of 85 per cent was a record. This was lower in previous years, especially during the UDF tenure. This being the case, Isaac also knows he would not have to release the additional 20 and 30 per cent he had promised.
Joseph's argument was that the Treasury was already wiped clean. He said the first tranche of Rs 1750 from the World Bank for post-flood reconstruction had been diverted for other purposes. Furthermore, he said the government had no answer to even the amount of money in the Chief Minister's Distress Relief Fund (CMDRF). He was hinting that even this money had been used up for other purposes like the payment of salaries and pension.
“It has been 10 days since we had officially asked the Chief Minister about the money parked in the CMDRF. The answer given was that the information was being collected. Why should it take so much time when the information could be secured with the click of a single key in the computer,” Joseph said.
