The state is heading for a total collapse in the fiscal situation, says the white paper presented by finance minister Thomas Isaac which was tabled in the Assembly. The Finance Minister tabled the white paper in the Assembly today. Earlier LDF government decided to bring out a white paper on the financial status of the state when it came to power on May 24.
The current financial status is such that several estrictions will have to be brought in for the next two years including no out of agenda items in the cabinet, no new institutions and no new post creations. While pointing out that indiscipline shown by the previous UDF government in the financial management, Thomas Isaac said there is a total collapse of tax administration such that the tax revenue came down to 12% and there was virtual collapse of capital expenditure. There were no steps taken to check the tax leakage and for revenue generation.
Thomas Isaac was highly critical on the significant subversion of the tax generating machinery. The tax collection was lagging behind the growth of the economy and the revenue generating departments were not empowered fully to effectively mobilise resources. The UDF government borrowed money without analysing the economic status of the government and deactivated the tax collecting machinery resulting huge tax drain during the last five years.
Significant tax concessions were given even through budgetary announcements even at the peril of a collapse of the treasury which was already starving for funds. The state has to raise at least Rs.10,000 crores to repay the bills pending before the government. UDF government never bothered to practice financial discipline and announced mega projects without budgetary allocation. Even though the UDF government claims that Rs 1643.99 crore was there in the treasury as on March 31, the fact is that there were pending bills such that the cash balance recorded a negative Rs 173.46 crore for the first time.
"The first manifestation of the crisis was the record low in the cash balance when the UDF left the power. In the last ten years this is the first time the cash balance became negative. The second manifestation was that the revenue deficit increased in the last five years. If the trend of A K Antony government was followed, by this year the revenue deficit would have become zero," said the finance minister. The revenue deficit of the state rose to Rs.8199.14 crores and fiscal debit to Rs. 15888.17 crores. During 2011-16, the public debt had doubled from Rs.78673.24 Crores to Rs 150000 crores. It's an alarming situation that will certainly hinder the development of the state.
The LDF government has decided to tackle the financial situation by reactivating the tax collection machinery and will target a tax revenue growth of 20-25 per cent. Steps would be introduced to check tax evasion and all the check posts would be strengthened and modernised to prevent tax drain.