The government would have to immediately initiate steps to bolster its tax machinery, impose stringent curbs on non-plan revenue expenditure, and rein in revenue deficit to steer clear of the current fiscal impasse that is threatening to stymie the routine transactions and the growth prospects of the State.
Finance Minister T.M. Thomas Isaac said a sustained growth in tax collection at 20 to 25 per cent would be ensured for the next five years. The primary focus would be on realising tax revenue of Rs.13,019.81 crore that have been raised but remain unrealised due to administrative laxity.
About 60 per cent of the cases of the pending tax arrears are undisputed. Though there were no hassles in collecting the arrears, the UD government had not tried to secure the undisputed component amounting to Rs.7,861.42 crore. So, there would be renewed effort to mop up the arrears soon.
Commercial tax
The collectable tax in the Commercial Taxes Department on April 30, 2016 pending in appeals is Rs.3,720.62 crore. Owing to the alleged laxity in initiating timely action to clear the legal tangles, the arrears could not be collected. Huge amounts of stays issued during the past five years need to be lifted. Now steps would be taken to secure the arrears on this score too. Revenue generating departments would be empowered for effective resource mobilisation.
Growth of non-plan revenue expenditure would be curtailed through prudent fiscal management and stringent curbs on avoidable expenditure. Owing to the efforts of the successive governments from 2001-06 and 2006-11, the State could bring the revenue deficit under control and its effect lasted during 2011- 2013. But it wore off by 2013-14 and the State slipped into funds crunch. The XIV Finance Commission had awarded a revenue deficit grant of Rs.4,640 crore in 2015-16, Rs.3,350 for 2016-17 and Rs.1,529 crore for 2017-18. The grants taper of to zero from 2018-19. Still, the government would have to bring down the revenue deficit by 2020-2021.
Lost opportunity
As per the White Paper on State’s finances, the State has lost a historic opportunity to catch up with the rest of the country in infrastructure investment by lowering the revenue deficit. The estimated loss of capital expenditure during the past five years has been estimated at Rs.2,516 crore.
