THIRUVANANTHAPURAM: Finance minister K N Balagopal is neither outspoken, nor flamboyant like his predecessor T M Thomas Isaac. His reticence and limited administrative experience make the new responsibility more onerous for him.
One thing that both opposition and government agree in Kerala is the perilous state of the economy. What remains absent is the political forthrightness to address the issue in its essence and gravity. “It's no secret that the state's financial position is in dire straits. As per the latest figures released by CAG, our fiscal deficit is Rs 44,313 crore till January 2022. The figures for the last 11 months tell that 34 % of our expenditure during the period was met through borrowings. We live on borrowed money,” explains state public expenditure review committee former chairperson B A Prakash.
Back-to-back floods and Covid-19 have taken a serious toll on the state finances in the last few years. But the present crisis has been brewing since decades. White papers released by governments in 2001 and 2016 warned of severe financial crunch post 2020.
“What is most ignored, yet most important is the need for a clear idea about debt management. Living on borrowed money for long is a bad practice with predictable outcomes. The government should at least now come up with debt management and publicize it. Living on borrowed money forever is a bad idea with a predictable outcome,” said K T Rammohan, former dean, faculty of social sciences, M G University.
Though Balagopal doesn’t say that state-funded autonomous bodies like universities can’t expect the government to fund them for ever, his adamant stand that universities should start sharing the responsibility of pension commitment to retired employees is seen as a first step towards the government curtailing its expenses. The finance minister is likely to make more such unpleasant, but realistic interventions this time in the budget.
There are optimistic minds who don’t think the state economy is doomed beyond recovery. “Our financial position is bad. We have acquired some debt. But considering the trying times we faced in recent years, expenditure through borrowed money is justifiable. Our economy still has the resilience and strength to achieve new heights,” said taxation expert, Prof L Anitha Kumary of Gulati Institute of Finance and Taxation.
According to her, the state still has a lot to explore in terms of taxation, especially from land and building tax. While stamp duty on registration should be brought down from the existing 10%, the fair value of land should be increased to match the market value. “Our tax avenues are still abundant. If there is enough prudence to plug the pilferage and optimize the existing resources, we could certainly offload the debt burden,” she added.
