Finance minister Dr T M Thomas Isaac's white paper shows dark side
The minister also put forward a three-pronged strategy to tide over the fiscal crisis.
THIRUVANANTHAPURAM: Finance minister Dr T.M. Thomas Isaac has painted a disastrous picture of the UDF government’s handling of the economy. If the mismanagement of finances had continued, the state would have plunged into what he termed “fiscal anarchy” by 2017-18, Dr Isaac said in a White Paper on the state finances that he tabled in the Assembly on Thursday with the aid of colourful graphs and tables.
Dr Isaac pointed out four tell-tale signs of fiscal deterioration: negative cash balance in the treasury, immediate liabilities of '10,000 crore, alarming neglect of deficit goals, and the desecration of the budget document. The cause for the rot has both revenue and expenditure dimensions.
It was a failure of both expenditure control and resource mobilisation, the White Paper says. The paper shows that the growth in commercial taxes, which looked up since 2007 and reached a peak during the 2010-11 fiscal, started declining and fell below the economic growth of the state from 2013 onwards. The paper offers two main reasons for the state of affairs: one, corruption and nepotism in the tax administrative apparatus and two, unnecessary government stays on commercial taxes.
The minister also put forward a three-pronged strategy to tide over the fiscal crisis. Raise the tax revenue and sustain its growth at 20-25 percent, clamp strict controls over non-plan expenditure and go for massive off-budget borrowings to increase capital expenditure.