Tuesday, May 23rd, 2006

Thiruvananthapuram – The financial health of Kerala is alarming and not as rosy as projected by the former Congress-led United Democratic Front (UDF) government, economist-turned finance minister Thomas Issac said Tuesday.

Issac said the annual plan and the budget presented by the UDF government early this year was exaggerated.

‘They have projected an annual plan of Rs.64.5 billion for the current fiscal which is merely window dressing of the state finances, and only one-fourth of it would be achieved. In order to go according to the presented budget, we would need another Rs.40 million,’ said Issac at his first press meeting here.

He said the cabinet would soon decide whether to present an alteration memorandum or a revised budget.

‘We are soon going to begin a discussion with all concerned parties, including the people of Kerala, to highlight the mismanagement of the state finances in the last five years of the UDF’s tenure,’ the minister said.

‘For the salary revision, which the UDF government announced in March, we have to find a staggering Rs.9 billion and no provision for that has been made.’

He said with the central government already declaring Kerala as a state under debt, the option of external borrowing funds was also over.

He said there were three options to tackle the situation, downsizing of the plan, asking the central government not to stress on Article 293 of the Constitution that prohibits borrowing, and going hard on tax collection.

‘In Kerala, only one-third of the actual tax due is being collected. One of the three options has to be exercised soon after taking the concurrence of the people here,’ said Issac.

He also dismissed the claim of former chief minister Oommen Chandy that the finances had been handed over on a platter with a surplus of Rs.2.7 billion.

‘A mere cash surplus on a particular date is no indicator of the financial health of the state. The tax- gross domestic product rate buoyancy is no longer there as before. The state’s finances are in a mess, but I assure you that we do not intend to inflict a telling blow by redudcing the salary of the state government employees,’ added Issac.