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Vinson Kurian

Caught between the devil they know and the devil they don't, people of Kerala have ended up carrying the highest per capita debt burden. But the real devil lay in the detail. And, his tail packed the lethal sting in that despite the high taxes, Kerala has also run up one of the largest fiscal deficits.

THIRUVANANTHAPURAM, March 22

ROBBING Peter to disrobe Paul! This more or less sums up the way successive State Governments have went about raising finances, not to speak of the many hackles, to support their profligate ways of spending.

In the process, the Government has landed a double whammy on the hapless people, rendering them one of the most `taxed' in the south of India even while leaving no stone unturned to borrow whatever much from whichever source it could access.

Caught between the devil they know and the devil they don't, people of Kerala have ended up carrying the highest per capita debt burden as well.

But the real devil lay in the detail. And, his tail packed the lethal sting in that despite the high taxes, Kerala has also run up one of the largest fiscal deficits.

"Clearly, there is a lot the State Government and its politicians have to answer for,'' says Mr K. P. Joseph, former Accountant-General, pointing out glaring inconsistencies in the State's books of accounts.

Information culled out from the Kerala Budget Volume, Budget In Brief, which is based on RBI data, bears this out. The per capita tax in Kerala is the highest in the whole of South India, except Tamil Nadu. (A small mercy since, till very recently, the per capita tax in Tamil Nadu was lower than that of Kerala. It had gone up surpassing even that of Kerala's during the rule of the last DMK-led Government).

There is no doubt the Antony Government inherited an empty treasury when it came to power in May last year. In the words of Mr Joseph, there was serious mismanagement of finances by the predecessor Government, leading to a ballooning of the revenue deficit (estimated at Rs 2,400 crore, but expected to go much higher up as a result of the 32-day-long strike by employees of the State Government).

The Government has been borrowing at high rates of interest from all available sources for such routine expen- diture as paying salaries for a long time. The predecessor Government had wasted enormous amounts on pet schemes like people's planning for which proper accounts are not available.

Faced with a fait accompli, the Antony Government published a White Paper detailing the state of finances, which ran into 120 pages (one of the most comprehensive ever brought out by State Governments) in June 2001 which recommended that "immediate remedial measures should be adopted'' to reduce spending. But nothing was apparently done for seven months, except announcing an increase in bus fares and electricity charges, which only served to alienate the Government further from the people.

It in this context that the Government announced the infamous `January 16, 01' belt-tightening measures, supposedly the root cause of the spat with its employees culminating in the general strike.

According to Mr Joseph, it is doubtful if this would alone help resolve the financial crisis in the State. The January 16 order does not show how much money is expected to be saved by carrying out the directives. Nor has the Government informed the public as to how much money it needs to see off current contingencies.

Without knowing these figures, it is hard to understand how the Government plans to resolve the financial crisis, Mr Joseph says.

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