Kochi: The medium term fiscal plan of 2014-15 presented by Finance Minister K.M. Mani along with the state budget on Friday has painted an optimistic picture about the mounting debt burden of the state despite the high fiscal and revenue deficits.
The minister downplayed the debt by highlighting the favourable debt/gross state domestic product ratio. His optimism, however, is not shared by economists as the total debt burden of the state stood at a staggering Rs 114,121.38 crore constituting 28.29 per cent of the gross state domestic product.
Dr Jose Sebastian of the Thiruvananthapuram-based Gulati Institute of Finance and Taxation is of the view that budgets have ceased to address long-term issues such as debt and ways to explore sustainable avenues for augmenting own resources of the state.
“Kerala needed to augment the capacity to raise its own revenue resources, especially in the area of non-tax revenue, to ease the problem of debt,” Dr Sebastian said. “Like business cycles, budgets are also subjected to political cyclicality, especially when elections are round the corner,” says Dr Rudra Sensarma, associate professor, economics, Indian Institute of Management, Kozhikode.
There are studies to show that the finance ministers both at the centre and the state focus more on the expenditure side with populist schemes ignoring the larger issue of debts and revenue mobilisation when elections are near, he said.
Dr K.N. Harilal, former member of the State Planning Board and associate professor of Centre for Development Studies, Thiruvananthapuram, is of the view that inefficiency in revenue collection and fiscal profligacy during the past two years had worsened the debt profile of the state.
The medium fiscal plan, however, observed that “despite high fiscal deficit in 2013-14, the debt/GSDP ratio has been manageable and from 2013-14, further consolidation needs to be achieved.”
