THIRUVANANTHAPURAM: Alarmed by the precarious financial situation in which the State finds itself now, the LDF State committee spent a fair part of its deliberations here on Saturday to the fiscal crisis and directed Finance Minister T.M. Thomas Isaac to raise the interest on treasury deposits by half-a-per cent and think about measures for better revenue mop-up.

Briefing reporters after the LDF State committee meeting, LDF convener Vaikom Viswan said that the State was faced with the constant prospect of falling into overdraft and there was a serious fiscal crisis looming large over the State on account of the shortfall in anticipated revenue transfers from the Centre and the curbs imposed by it on borrowings. Against the anticipated revenue of Rs.3,000 crore from small savings, the State could get only Rs.1,500 crore.

Ceiling

The Centre had also imposed a ceiling of Rs.7,200 crore on borrowings by the State Government making impossible for it to tap funds from agencies such as the Life Insurance Corporation of India. Slippage in repayment of loans taken from the Housing and Urban Development Corporation (HUDCO) was also proving to be a matter of concern, he pointed out.

UDF legacy

Mr. Viswan said the current financial crisis was a legacy from the five years of UDF governance and claimed that the current crisis was despite the 50 per cent increase in revenue from Value Added Tax.

The Government had been told to fix fair value of land to facilitate better revenue realisation.

Although some proposals for additional resource mobilisation had come, those would be approved only after detailed discussions within the alliance. As part of the efforts to explore avenues for additional resources, a meeting of State Finance Ministers and economists would be held in May to discuss the related issues, he said.

ADB loan

The LDF convener said the committee could not discuss the issues relating to the proposed loan from the Asian Development Bank (ADB) for the Sustainable Urban Development Project as the relevant documents became available to the committee only on Saturday. The documents should be studied in detail before a decision was taken on the related issues. This would be done at the earliest.

Replying to a question, Mr. Viswan claimed that some substantive changes had been effected in the ADB loan agreement following a public outcry in the State.

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