Pruning revenue spend a huge task

THIRUVANANTHAPURAM: A detailed assessment of state’s finances reveals that the state is heading towards serious financial bankruptcy in the coming years.

A set of documents from the finance department shows that non-productive revenue expenditure accounted for 91% of the state’s total expenditure in 2017-18. It was 2% higher compared with the previous year.

The overall financial position of the state is evident from the fact that the per capita debt, or the debt that the government has per citizen, has increased significantly from Rs 37,150 in 2013-14 to Rs 59,588 by 2017-18.

Even within the revenue expenditure, the expenditure on salaries, wages, interest payments, subsidies and pensions have eaten up a major share. In fact, such committed expenditures accounted for 69% of revenue expenditure for 2017-18. Even more alarmingly, this figure is 6% higher compared to the previous year. This expenditure is also at the highest in the past five years.

At the same time, capital expenditure, or what is spent on fixed asset creation for the state, decreased by 2% to just about 8% in 2017-18 from previous year’s 10%. The capital expenditure, which decreased by Rs 1,377 crore compared to the previous year, is much lower compared to other general category states (14.40%), indicating that the state has been giving low priority to capital expenditure.

Coming to the revenue resources of the state, the receipts increased from Rs 75,612 crore in 2016-17 to Rs 83,020 crore in 2017-18. The state’s own tax revenue, which is the main component of revenue receipts, increased from Rs 42,177 crore in 2016-17 to Rs 46,460 crore in 2017-18. At the same time, the receipts through VAT and central sales tax that have been subsumed to GST, dropped from Rs 33,453 crore in 2016-17 to 24,578 in 2017-18. As much as 18-24% of revenue receipts were consumed by interest payments and pension commitments of the state government.

The major non-tax revenue for the state was receipt under the lottery sales, which stood at Rs 9,034 crore for 2017-18, but distribution of prizes, agent commission etc consumed Rs 7,628 crore of the earnings, effectively reducing the net yield to Rs 1,406 crore. Also, the grantin-aid from the Centre increased only marginally, by Rs 18 crore.

The state also could not achieve any of the targets fixed in the Kerala Fiscal Responsibility Act and the medium term fiscal plan, the figures show. The outstanding loans and advances that were disbursed by the state as on March 2018, stood at Rs 15,000 crore. As many as 67 institutions, to which loans were granted, have become defaulters in repayment of loans, which alone amounted to more than Rs 12,000 core. They include the Kerala Water Authority, the Kerala State Electricity Board, the Kerala State Road Transport Corporation, the Kerala State Housing Board and the Kerala State Cashew Development Corporation.