With the treasury reserves touching minus level for the first time in six years, Kerala’s Congress-led UDF Government is being forced to adopt severe austerity measures to tide over the deepening financial crisis.
A squeeze on appointments, freeze on creation of new posts, suspension of purchases of articles like new vehicles and controlling foreign tours by officials are some of the urgent measures the Government is planning to adopt. To increase tax collection and cut expenditure are the two ways the Government is proposing to adopt for meeting the emergency.
The Additional Chief Secretary in charge of Finance told a Cabinet meeting on Thursday that Kerala’s financial condition was in dire straits. It was pointed out to the council of Ministers that the reserve in the State Treasury had fallen below the minimum required level, suggesting that the situation could further worsen in the coming days.
The main reason for the current crisis is the inability of the Government to raise tax collection to levels proposed in the State Budget, a development of which the Opposition had given clear warnings much in advance. Data suggest that tax collection had refused to come up even after the signs of crisis had become obvious.
“What we are proposing to do is to cut non-plan expenditure without putting people into trouble and to increase tax collection. There will be no move to reduce plan expenditure but possibilities of implementing such measures more effectively would be examined,” Chief Minister Oommen Chandy told newsmen after a Cabinet meeting on Thursday.
The State Chief Secretary has proposed measures like imposing strict controls on foreign trips of people’s representatives and officials. Foreign tours should not be undertaken unless contracts that were beneficial to the State were involved, he said. He also proposed that delegates should not be sent from Kerala to international fairs conducted outside the country.
The Cabinet observed that there had been no increase worth mentioning in tax collection while the expenditure had gone up by over 18 percent. Tax revenues showed a decline by four percent in comparison to the expectations mentioned in the Budget. Finance Minister KM Mani also indicated that the State would have to adopt tough measures in the context.