Kochi: The Kerala State Planning Board has suggested that some of the projects given priority in the state budget of the current financial year be axed or cut down in scope as part of the efforts to raise resources for the reconstruction of flood-ravaged state.
In a recent note to the government, the Board has also suggested that the state budget for the next year be prepared by taking into account the requirements of the reconstruction.
According to Planning Board member Dr B. Ekbal, the state will have to prepare a budget totally different from previous ones, given the enormous task the state is facing after the floods.
The Board has also stressed on the need for the Union government to increase the fiscal deficit limit to 4.5 per cent from 3 per cent for the state. The Fiscal Responsibility and Business Management Act (FRBM) has a provision to provide exemptions to states facing natural disasters in achieving the fiscal deficit targets, said a top official of the Board.
It may be recalled that the then Union government had set a revised fiscal deficit target in 2008-09 period in the wake of the global recession.
The lifting of fiscal deficit targets will enable to the state to borrow more for undertaking the reconstruction works. The state has already made a temporary estimate to the tune of Rs 20,000 crore as the losses it suffered in the floods. Finance Minister Thomas Isaac, a votary of flexibility in fiscal deficit management, has always opposed rigidity in fiscal deficit targets.
