Increasing income solely approach out for Kerala, really feel consultants

By Express News Service

THIRUVANANTHAPURAM: Ahead of the second funds of the Pinarayi Vijayan Government 2.0, all eyes are on Finance Minister KN Balagopal who is anticipated to take robust measures to handle the worsening state funds and in addition introduce novel initiatives to draw investments.

Measures to extend the federal government’s income are inevitable to make sure funds for growth and welfare actions, really feel consultants. Some anticipate measures to take ahead the data economic system programme introduced within the final funds of the earlier authorities.

“Kerala’s economy is not in a good shape, obviously because of Covid. The finance minister’s challenge would be to transform adversity into an opportunity, by making the economy more vibrant. The government’s revenue has to be increased. For that, tax rates need to be raised,” says Okay J Joseph, director of Gulati Institute of Finance and Taxation (GIFT). He expects Balagopal to take steps to do away with borrowing dependence by elevating taxes and by making the economic system extra vibrant.

“For that, we need to attract more investment,” he says. Increasing tax income and making the gathering extra environment friendly are crucial for the federal government to tide over the disaster, feels Okay P Kannan, growth economist and former director of the Centre for Development Studies. “The authorities’s personal tax income is anticipated to come back down by 20% this fiscal as towards what was budgeted.

The borrowing will enhance subsequently and, already there are reviews that the state has already exceeded the borrowing estimates,” he says. He says the tax assortment was the bottom within the final 30 years by way of share of tax collected out of the state revenue. “The only way forward is to strengthen tax collection. That should be the first priority,” he says.

The authorities also needs to be sure that the tax collected by public enterprises lands in its coffers. “For instance, KSEB has not paid over Rs 1,400 crore it had collected as electricity duty,” he provides. Kannan feels the federal government ought to present the braveness to take long-term choices like elevating the retirement age. Economist and chairman of the Fifth State Finance Commission B A Prakash says the fiscal disaster confronted by the state is a structural, persistent and elementary downside.

“You cannot tackle it with ad hoc measures limited to a government’s tenure. There should be a big change at the policy level. There should be bold and effective steps for expenditure cuts,” he says. He feels that the current pay revision of presidency staff and pensioners has put an enormous legal responsibility on the exchequer. “The government employees and pensioners were not affected by the pandemic-induced economic crisis. The Pay Revision Commission pegged the additional burden due to salary revision at Rs 6,000 crore. But the government says it would come around Rs 10,000 crore,” he says.

Fiscal deficit 3.5% of GSDP

Total expenditure within the ongoing fiscal, 2021-22, is estimated to be Rs 2,14,479 cr. This can be met by means of income receipts of Rs 1,31,335 cr and borrowings of Rs 76,866 cr

The estimated fiscal deficit in 2021-22 is 3.5% of GSDP or Rs 30,698 cr. Estimated income deficit is 1.93% of GSDP or Rs 16,910 cr. Revised estimate on income deficit in 2020-21 was Rs 24,206 cr. This was 59% larger than the unique funds estimate of Rs 15,201 cr. The revised estimate on fiscal deficit in that yr was 4.25% of GSDP.