THIRUVANANTHAPURAM: The state’s fiscal strategy demonstrates that it is functioning barely for the moment, seriously jeopardizing the future development of the state. Consider this: Already 60 per cent or Rs 8400 crore of the fiscal's borrowing limit of Rs 13,950 crore this fiscal has been crossed by now but nearly 85 per cent of the Rs 20,000 crore plan funds remain unspent even after six-and-a-half months.
This means that funds strictly meant for development has gone into meeting salary, interest and pension expenses. With revenues still not picking up, the chances of a near development freeze in the state this fiscal are considerably high. In the notification the state issues while putting up its securities for sale, with the approval of the RBI, it is clearly stated that the proceeds of the loan will be utilized for financing the developmental activities of the state. “Except for some public works, virtually no amount has been spent in the state this fiscal for development. And if the money spent on public works in closely analysed, you will find that more than 80 per cent is spent on maintenance and not for the creation of new assets,” a top Finance Department official said.
Revenue growth is a weight the state is finding impossible to lift. During September, thanks to Onam, growth in taxes demonstrated a relatively healthy growth of 18 percent. But by October it fell back to sub-10 percent. The closure of bars will definitely hit the state hard as it is the sale of IMFL that generates the highest tax revenue for the state, nearly Rs 5000 crore annually. Motor vehicle sales, the other big revenue earner, too have not picked up. Revenue from stamps and registration has shown a negative growth.
To make matters worse, the mobilization drive launched by the state to shore up its revenues are not yielding significant returns. “Collectors have reported back to say that revenue recovery is virtually impossible. Most of the defaulting companies we had identified have now been found to be non-existent,” a senior tax official said.
