THIRUVANANTHAPURAM: For economists who are worried over the mounting debt burden of the state, the budget is the last hope for the government realising the gravity of the situation and coming up with a proper debt management plan to save the state from hitting a point of no return.
The outstanding debt of the government, according to the 2021-22 Budget, is Rs 3.27 lakh crore. This is 37.39 pc of GSDP, a quantum jump from the 29.82 pc in 2018-19. In addition to this are the off-budget borrowings through the special purpose vehicles for infrastructure development Kerala Infrastructure Investment Fund Board (KIIFB) and social security payment, the Kerala Social Security Pension Ltd.
“The state is heading towards a deep crisis which was flagged by the CAG itself. The original outstanding debt of the state is much more than the 2021-22 budget’s projection of 37.39 pc of GSDP as the borrowings through KIIFB and KSSPL are not included in this. The per capita debt should have crossed Rs one lakh. Sadly, the government is indifferent to this,” said Mary George, economist and former member of the Public Expenditure Review Committee.
The only option left, she says, is to increase the revenue. “There is largescale tax evasion in the state. GST is a destination-based tax and Kerala is a consumer state. But the state is ranked seventh in GST revenue. It is quite evident that the tax collection system is inefficient,” she said. The government should also explore the state’s avenues of non-tax revenue more efficiently, she says.
Economist and former head of economics department, Government University College, V Nagarajan Naidu opined that the state should follow a growth-oriented strategy to tackle the debt menace. About 80 pc of the state’s revenue is spent on revenue expenditure, including salary, pension and interest payments. “But there is not much scope to control revenue expenditure. The solution is to increase GSDP by all means,” he says. The government should also follow RBI’s direction to form a consolidated fund for debt repayment, Naidu said.
