The Kerala Assembly concluded its budget session this week without much in-depth discussions on the Budget. Bigger controversies than finance took the time of the House.
The coming year will show whether the zero revenue deficit and other improved financial parameters projected by Finance Minister T. M. Thomas Issac for 2010-11 is achievable.
A major point to watch in 2008-09 will be whether the increase in revenue expenditure will come down from around 25 per cent this year to 8 per cent projected by the Finance Minister. The State will be coming out of the debt overhang with interest rates lower than the growth of State Domestic Product.
The myths listed by the Finance Minister in his Budget speech will be fully cleared (off the minds of people) only when he concludes the coming financial year in tune with his projections. Let us wait for that.
P. S. The Finance Minister said that the following assumptions were wrong to varying degrees, and hence were myths.
- Kerala is in a debt trap.
- The State Government is free to borrow from the surplus funds of co-operative and commercial banks of the State.
- The tax revenue of Kerala is not increasing.
- Tens of thousands of rupees of tax arrears remain to be collected in the State; if collected the financial crisis can be solved
- Day by day the State is being crushed by the increasing interest burden.
- The deficits in Kerala are increasing.
- Plan expenditure is declining in Kerala.
- The Plan allocations included in the Budget are not spent either due to non-availability of funds or due to their nonrelease.
- Financial management of the State is not efficient