Falling revenues has necessitated the expenditure cut
Thiruvananthapuram: In an unprecedented move that unmasks serious fiscal crisis, the finance department has decided to go for a massive expenditure downsizing for two years in succession. Welfare measures, market intervention programmes and public works like road development will be scaled down. All uneconomic schemes, a finance department circular states, will be dropped and maintenance works will be postponed by two years. Hundreds of government employees are expected to be rendered surplus. The Department has no plans to retrench them either.
The strategy is to cut down expenditure during this fiscal and retain the low expenditure level during the next fiscal 2015-16.
As of now, the total non-plan revenue (which includes among many items salaries, pensions, welfare measures, market intervention programmes) is fixed at Rs 60946.51 crore. The plan is to reduce the figure to the 2013-14 level of Rs 52,000 crore.
“If inflation is taken into account, rather than remaining stagnant, expenditure will fall in this and the next fiscal, something which has never happened in the state,” a top finance department official said. The official said that salaries (which is pegged at Rs 23190.25 crore) would be the only non-plan item that would be left untouched as it could lead to public unrest.
Falling revenues has necessitated the expenditure cut. “The growth in tax revenue in the last two months has remained below 10 per cent,” the official said. For Mani’s plans to work, a 20 percent-plus growth in tax revenue is essential.
Here is what a circular issued by the finance department states: “The serious financial constraints being faced by the State government make it imperative for the Government to prepare the Budget 2015-2016 with extreme austerity.” This means introduction of economy measures in all spheres of activity. “It might necessitate the dropping of uneconomic schemes and perhaps deferment of certain measures including maintenance expenditure, which can be postponed,” the note said.
Such downsizing will leave a lot of surplus staff. Instead of offering plans for retrenchment, the government has asked department heads to prepare a list of such surplus staff and keep it ready for “future use”.