Record revenue deficit on cards: FM Thomas Isaac
The minister said the only way out was to increase revenue income.
Thiruvananthapuram: In what can be seen as an attempt to prime the people before the 2017-18 Budget, Finance minister Dr T. M. Thomas Isaac said that the state would witness “record revenue deficit” during 2017-18. “After what demonetisation has done to the state economy, we have no choice,” Isaac told the media after the pre-budget consultation he held with stakeholders here on Wednesday.
The budget will be burdened with huge pay outs, including the arrears of pension and salary commitments and their accumulated interest. The LDF government had already increased plan outlay for 2017-18 by 10.5 percent, from Rs 24,000 crore to Rs 26,500 crore. What’s more, Isaac said that the Budget, in spite of the paucity of revenues, would not hold back on welfare measures either. “I accept that there is a contradiction here but the LDF government does not believe in withholding the benefits of the common man,” he said. “We could have easily mobilised '3500 crore if we had postponed the payment of pensions,” he said. Isaac also admitted that a high RD could deprive the state of some central assistance.
Nonetheless, Isaac said that a high revenue deficit would be a temporary phenomenon. “I am sure that once GST kicks in, the state’s VAT revenues will grow by more than 20 percent,” the minister said. During January, the growth in VAT revenue was four percent.
The minister said the only way out was to increase revenue income. One measure he has in mind is an amnesty scheme for tax defaulters. Over Rs 7000 crore is caught in legal issues, and Isaac wants a share of this money. “The actual tax component forms just a small portion of the amount, somewhere around Rs 2000-2500 crore. The rest is the penalty amount,” he said.
A decade ago, an amnesty for Kerala General Sales Tax had fetched Rs 500 crore. Isaac hopes that he would get double or treble the amount with the proposed amnesty scheme.