THIRUVANANTHAPURAM: The Economic Review 2017 by the State Planning Board has painted an elaborate picture of the state’s current financial crisis. According to it, compared to the national average the state’s present GDP growth is not very encouraging. For the first time, the state economy has lagged behind the national average. A slew of factors, including nationalisation in the Gulf countries, had an impact on the inflow of foreign remittances to the state. A deceleration of export demand combined with national trade policies resulted in decline in prices of plantation and related products, thus affecting the traditional industries - the mainstay of the state’s economy.
Fiscal deficit rising
The Economic Review observed the fiscal indicators of the state suffered a setback in 2016-17. The proportion of revenue and fiscal deficit fell to 2.51 per cent and 4.29 per cent of the GDP. The currency scrapping exercise affected the revenue buoyancy of the state. clearance of contingent liabilities left over by the previous government, disbursement of social security pensions with long pending arrears were the other major reasons which led to the scenario. The revenue deficit became Rs15, 484.59 crore in 2016-17 from Rs9,656.81 crore in 2015-16. Similarly, the fiscal deficit became Rs26,448.35 crore in 2016-17 from Rs17,818.46 crore in 2015-16.
Central transfers
From 40.03 per cent in 2015-16, the annual growth rate of Central transfers came down to just 9.82 per cent in 2016-17. While the state received Rs21,612.02 crore in 2015-16, the transfer became Rs23,753.37 crore in 2016-17. In the current year, the state is expected to get Rs28,135.46 crore as Central transfers.
Tax revenue and non-tax revenue
Growth rate of state’s own tax revenue has been showing a declining trend for the last five years. In 2010-11, it was 23.24 while in 2016-17 it came down to 8.16 per cent. The receipt from the state’s own tax revenue showed a marginal increase of Rs42,176.38 crore in 2016-17 compared to Rs38,995.15 crore in 2015-16.
Receipts from the state’s non-tax revenue showed an increasing trend in the last few years. The annual growth rate indicated a downward trend from 2013-14. In 2016-17, the revenue from state lotteries was Rs7,283.29 crore with a record growth rate of 16.13 per cent.
Revenue expenditure
The annual growth rate of revenue expenditure has increased by 15.77 per cent in 2016-17 against 9.68 per cent in the previous year. The share of committed expenditure on revenue expenditure increased during 2016-17 compared to 2015-16. Expenditure on committed liabilities on salaries, pensions, interest payments, subsidies and devolution to LSGs constitutes 69.31 per cent of revenue expenditure.
In 2016-17, salary expenditure as portion of total revenue expenditure was 30.69 while it was 29.80 per cent in 2015-16.