Thiruvananthapuram: Though the tax administration faltered badly during his watch, K M Mani had ruthlessly withheld funds from departments and had even encroached into the autonomy of local bodies to keep money in the exchequer. Result: no development worth its name had taken place during the last four years but the exchequer was not emptied out.
Now with Chief Minister Oommen Chandy at the helm, senior Finance Department officials fear that the restrictions on the treasury will ease. “The Chief Minister has a generous style of functioning. He loves to play to the gallery. And with not much time left for the Assembly elections, we fear that he will loosen the purse strings to the disadvantage of the state," a top official said.
The state is currently passing through a phase of stagnation. Tax revenue, like in the past three years, has fallen way below expectations and, as a consequence, the state government is borrowing heavily not for development purposes but to meet its day-to-day expenses, mostly salary and interest payments. The state had already borrowed Rs 7000 crore from the open market, nearly 60 per cent of its limit, and not a single rupee went into development. The latest tranche of Rs 500 crore was borrowed on November 6, four days before Mani resigned.
Plan fund utilisation, even during the last phase of the third quarter, is below 30 per cent, lower than even the November figures during the last fiscal when utilisation had touched a record low.
The fear is, the nearly Rs 5000 crore that the state can borrow during the next four months of the fiscal would be used to extract political gains during an election year.
“Election years have always been bad for the economy. But since the state is already in the throes of stagnation, the diversion of funds for non-development purposes can be fatal,” a top Finance Department source said.
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