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Cash Crunch: Capping of Pension Mooted

A strong plea to set minimum and maximum limits for pension for government employees has been mooted, while seeking ways to overcome the financial pinch felt by the state, at a seminar on the Kerala Public Expenditure Review Committee Report here on Tuesday.

Published: 19th February 2014 10:49 AM  |   Last Updated: 19th February 2014 10:49 AM   |  A+A-

A strong plea to set minimum and maximum limits for pension for government employees has been mooted, while seeking ways to overcome the financial pinch felt by the state, at a seminar on the Kerala Public Expenditure Review Committee Report  here on Tuesday. As the burden of the exchequer for payment of  salaries and pension is shooting up year after year, with no matching growth in tax and non-tax revenue, eventually pushing the state for  heavy borrowing and to a near-to-debt stress situation, capping the pension has been suggested as one of the ways in addition to cutting wasteful expenditure and checkmating  tax evasion as a panacea to the state’s woes.

 Remaining non-committal on the proposal put forward by most of the participants in the seminar, including serving and retired college professors and economists for a ‘socialist path’ in disbursal of pensions, Finance Minister K M Mani said that all suggestions would be taken into account while charting the forward economic path of the state.

‘’My concern is that the quality of  utilisation of plan funds is getting lost, as 75-80 pc of the expenditure is being spent on a rush during the last quarter of a  fiscal,’’ Mani said. ‘’At present, it is all gimmicks to avoid lapse of funds,’’ he lamented.

 Mani said that in the latest budget presented by him, one of the major proposals is to give administrative and technical sanctions along with early allocation of earmarked funds to administrative departments. ‘’Various depts should rise to the occasion and come up with project proposals in a timely manner and co-ordinate with the Finance Dept. The Finance Dept is after various other depts to submit proposals,’’ he pointed out.

 Mani reiterated that there was no financial crisis in the state, but definitely the stress was there in the economic front due to various reasons. ‘’The point is effective utilisation of funds and investing in areas where there is returns for society and state,’’ he said. He said framing of policies by a govt was essentially based on the ‘political economy’ of a region and Kerala was also following the same principle.

 Speakers at the seminar noted that the state is not a rational borrower nor a rational spender. That the state is borrowing Central funds at 9.5 pc interest and advancing to the Centre at 4.5 pc, thereby making  a heavy dent in cash surplus in the treasury was highlighted. Lack of measures for adequate publicity for commodity-wise tax collection, contrary to what is practiced in the case of  lotteries, was pointed out as one of the reasons for non-growth in sales tax revenue.

Commensurate with heavy spending in the construction sector, there is no commodity wise data, for instance in the case of  sanitary items, for ensuring efficient collection of tax, it was said.

A suggestion for taking back prime properties given on lease by the govt to elitist clubs in various parts of state at paltry annual fees or selling them to holders itself at market rates was put forward, citing that the single measure would lead to overcoming the entire financial woes of state. The seminar was organised by Gulati Institute of Taxation Studies.


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