The Hindu Business Line : Kerala Govt justifies move to borrow from market

The Finance Minister, Mr K. Sankaranarayanan, said in a statement that though the Government was able to mop up Rs 1,200 crore more by way of taxes so far this year than in the previous year, it had been forced to incur much higher expenditure on account of drought relief activities.

He pointed out that out of the total annual plan outlay of Rs 4,430 crore for the current year, an amount of Rs 640 crore had been earmarked for the power sector, while another Rs 600 crore was to come as loan from the Asian Development Bank.

Of the remaining Rs 3,190 crore, the Government had spent Rs 2,006 crore till December 31, 2003, which worked out to 62.8 per cent of its plan expenditure.

One of the reasons for seeking additional borrowings is the delay in getting the ADB loan. Also, the Government had to pay interest to the tune of Rs 147 crore on account of taking over the liabilities of the State Electricity Board due to central power utilities.

These apart, the Government had to shoulder additional liabilities of Rs 556 crore this year in order to avoid increase in electricity tariffs as recommended by the State Electricity Regulatory Commission, the Minister said.

The Minister noted that the Government had shown additional revenue income of Rs 800 crore in the Budget estimates for 2004-05. This had been done on the suggestion of the 12th Finance Commission that the State could improve its tax-GDP ratio in the prevailing economic growth scenario by efficient tax collection drive.

He stressed that irrespective of whether or not being given permission for additional market borrowings, the Government would ensure that no cheque bounced for want of funds till March 31 this year.