Kerala - Thiruvananthapuram   

State on path of fiscal stability

THIRUVANANTHAPURAM: Finance Minister T.M. Thomas Isaac has said the State is on the path of fiscal stabilisation.

Talking to the presspersons after presentation of his budget for 2008-09 in the Assembly on Thursday, the Minister said various financial indicators were improving. “We are not a basket case.”

The Minister said the revenue deficit in the budget could be abolished by 2010-11. In the absence of revenue deficit, it would be possible to use borrowings entirely for capital expenditure.

Dr. Isaac said the rate of increase in revenue expenditure would drop from 25.50 per cent this year to 8.10 per cent next year. This was because dearness allowance and other arrears were cleared this year. “The budget is clean now as the arrears have been cleared,” he said.

The budget would mean higher pensions and better health care for the man on the street.

“However, our dream is not fulfilled. Welfare of the poor is a commitment of the Left. But we need to increase capital investment to achieve growth,” he said.

Explaining his strategy for the Kerala State Road Transport Corporation (KSRTC) and the Kerala Water Authority (KWA), the Minister said he was enabling them to avail themselves of loans by writing off dues to the government. “I cannot take loans beyond the limit specified by the Central government. So, let the KSRTC and the KWA take loans.”

He said the government would extend budgetary support to Kerala State Civil Supplies Corporation to cover its losses. No limit had been specified for that.

The proposal to impose one per cent cess on sales taxes and value added tax, which would roughly work out to be Re.1 on purchases for Rs.1,000, would have no inflationary impact. The tax on aviation fuel was reduced because States such as Andhra Pradesh had cut the tax rate. Consequently, airlines were not fuelling from Kerala.

The amnesty scheme on tax arrears would save the effort on collecting old arrears. The proposed agriculture prices stabilisation fund would have a minimum corpus of Rs.50 crore by way of balance from the Debt Relief Scheme.

He said lease rents should be hiked to increase non-tax revenue. This budget need not propose that.

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