Kerala plans a spend fest
Govt to release Rs 7,000 crore in 50 days to get 80% utilisation
THIRUVANANTHAPURAM: It has by now become a habit, almost a ritual, for the state to announce that it will achieve 80 per cent or more utilisation by March 31, the end of the 2015-16 fiscal. The claim, though it seems realistic, could end up as mere wishful thinking.
Here is why. At the moment, just one-and-a-half months away from the end of the fiscal, plan fund utilisation is a weak 44.58 per cent (Rs 8,916 crore of the total plan outlay of Rs 20,000 crore).
Therefore to achieve 80 per cent utilisation, the state has to spend 35 per cent, or Rs 7,000 crore, of its total plan funds in about 50 days.
The general consensus is that it is impossible to spend Rs 7,000 crore in 50 days even if the state is flush with funds. But the state of finances is far from healthy.
Rate of growth of tax revenue is an alarming nine percent, considerably less than the estimate of 24 per cent. What’s more, open market funds are going into salaries and interest. To make matters worse, there is a fall in central outlay.
Still, there are ways to “fake” high utilisation.
“It has been quite usual for the Finance Department to indulge in illusory transfer of funds,” said Dr Mary George, member of the State Expenditure Review Committee. “That funds were transferred to and received by a government department would be recorded in books but in reality such a transfer would not have taken place,” she said.
However, she said that there would be a surge in tax revenues during February and March. According to her, traders have a habit of not paying taxes during the first three quarters.
“They would have influenced tax officials but by February and March they will have no choice but to pay up their arrears,” Dr George said.Even if such a late surge happens, economist Chandra Mouli said it would be insufficient to improve fund utilisation. Even Planning Board officials are guarded.
“It will depend on the liquidity position of the government and the anticipated inflow of resources, about which only the Finance Department knows,” a senior official said.