Kerala - Thiruvananthapuram   

Deficit may go up after pay revision: Vakkom

Special Correspondent

THIRUVANANTHAPURAM: Finance Minister Vakkom Purushothaman said here on Friday that the Budget deficit might go up when the revision of pay scales of Government employees was implemented.

Addressing a press conference after the presentation of the Budget for 2006-07 in the Assembly, the Minister said this would depend on the quantum of increase proposed in the pay scales. (The Pay Revision Commission is to submit its report this month). "We do not know the exact entailments of pay revision. So, no specific amount has been earmarked."

Principal Secretary (Finance) K. Jose Cyriac, who was with Mr. Purushothaman, pointed out that the Budget estimate for salaries next year was Rs.7,150 crores against current year's estimate of Rs.6,350 crores. Though this might appear insufficient compared to the provision made at the time of last pay revision, outstanding arrears of dearness allowance were lower now. Besides, the interim relief being paid now (and accounted for in the estimates) could be deducted from the expenditure arising out of the revision.

The Finance Minister said the increase in tax revenues had come to a standstill following the introduction of the Value Added Tax (VAT) system. The growth in tax revenue during the last ten months was zero. This was not because of poor compliance. Tax on several commodities had come down following the introduction of VAT. Besides, tax compliance in the State was better than in other States previously. So, the introduction of VAT did not benefit the State in terms of better compliance.

Mr. Purushothaman noted that the Centre had guaranteed for a growth rate of 18 per cent this year.

Asked about the lower provision for infrastructure development under industries, the Minister said allocation for infrastructure was spread across several departments.

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