Kochi: The state government will repay the debts it is planning to borrow from the market to fund its massive stimulus package from its own future income, Finance Minister Thomas Isaac has said. The government will follow up its plan for physical infrastructure with one for developing Kerala as a knowledge economy, he told DC.
“The government expects private investments to match the government investment of Rs 1 lakh crore into the economy over the next five years, and it will expand the economy,” Dr Isaac said. “This will improve the government’s tax receipts which will enable the government to repay the borrowings.” The government will use several ways, including annuity payments, to pay off the debts, he said.
Dr Isaac who presented the budget in the Assembly last week had said the government will borrow funds from the markets through Kerala Infrastructure Investment Fund Board (KIIFB) for projects which included land acquisition for national highways, modernisation of schools, healthcare system, ports and IT parks.
The whole idea is pegged on the government’s confidence that it will be able to wipe out revenue deficit in a few years by sprucing up the tax collection mechanism, he said. “We could have taken up the projects in the public private partnership route but it’s our political decision to take this alternative option.”
The government would fund KIIFB sufficiently to enable it to approach the markets, he said. “Apart from the share in motor vehicle tax and petrol cess, the government would this year itself earmark more funds for KIIFB,” he said. The finance minister said the government will come up with a plan to develop Kerala as a knowledge economy.
“We shall not stop with creating the physical infrastructure,” the academic-turned-politician said. “We would ensure that our state will have the best of educational institutions, universities, laboratories and research centres,” he said. The declining oil economy of the gulf countries has left the state with little option but to go in for massive investment in infrastructure and expansion of economy. ‘Not many realise that a major shake in the oil economy will be calamitous for us,” he said. “We need to get ready for it.”
