Growth in income and efficiency

The Left Democratic Front Government have completed two years in power. Three budgets were presented in the Assembly during this period. The first one was a correction to the budget of the previous government. Not small corrections; massive redoing that was demanded by the State was pointed out in the first budget itself. During this period great strides were made in improving the financial status of the State according to the policies of the Left Democratic Front.

The former government adopted the policy of reducing expenditure mechanically. Freezing the welfare incentives and squeezing employees and pensioners, steps to close down and disinvest public sector enterprises and total ban on recruitment were the steps adopted by the former government to improve the financial position of the State. The society in Kerala had made it clear that this approach was not politically acceptable. The approach of the Left Democratic Front is entirely different. In austerity measures, the approach was not unilateral. The approach was towards improving the financial position by increasing the income and improving efficiency.

This approach has become successful and there is considerable increase in the tax income of the state. The income growth has been achieved at 17 per cent per annum and reducing the increase of revenue expenditure at 8 to 9 per cent, a disciplined system has been brought into effect to abolish revenue deficit by 2010-11. Growth in income is essential for the success of this. The proof of how this can be achieved is the growth in the last two years’ income tax collection. In 2006-07, this was 22 per cent and in 2007-08, it was 17 per cent. Value Added Tax (VAT) growth in two years was 74 per cent. By adopting a disciplined and scientific approach in tax collection in the coming year, the success can be repeated.

When the revenue deficit becomes zero in 2010-11, there will be remarkable change in capital expenditure. This will provide great opportunity to invest for developmental projects through loans once the revenue deficit becomes zero. This will help in spending Rs.6,000 crore annually for capital investments even after complying with the central government norms. We should be ready for this giant leap. In this financial year itself initiatives towards this will have to be started. For acquisition of land for developmental programmes and for drinking water projects, roads, bridges etc., sanctions to the tune of Rs.1,000 crore is being given this year. On the foundation of an improving financial system, preparations are under way in this financial year itself to take a giant leap in capital expenditure.

Financial Management

This government is successful in achieving efficiency in financial management. No new restrictions on treasury for expenditure have been brought about. In fact, the existing restrictions have been waived. In the last financial year, there were no restrictions imposed to encash for project expenditures. Usually, for clearance of bills above the specified amounts required, the Ways and Means Clearance from the Finance department was insisted upon. But in the last financial year no such restrictions were imposed.

Steps to improve the efficiency of expenditure were undertaken. Efforts are being made to clear the pending arrears of the public works contractors so that competitive bidding tenders can be called for construction works. When the United Democratic Front government left power, the pending arrears for 22 months were due to the contractors. This was one of the major burdens of our government. It took 22 months to clear the bills of the contractors after submission of the bills on completion of the work. The contractors take up the work considering this delay. This delay and non-revision of the PWD rates on time for the construction materials had led to a situation of Tender Excess. Only after eliminating this, the efficiency of expenditure for construction activities can be improved. So far, the arrears due to contractors have been reduced to below the half mark. In 2007-08, Rs.1,600 crore was paid as arrear clearance to contractors. Initiatives have been taken to renew the PWD rates every year.

Liberalising welfare measures

In its 24 months in power, the Left Democratic Front Government have distributed 55 months’ welfare pensions. This government has released the welfare pension arrears for 31 months kept pending by the previous government. For this Rs.700 crore was spent. All welfare pensions till March were paid. Not only have the dues been cleared but the amount has also been increased. Pensions in the range of Rs.100-110 were raised to Rs.200. Efforts are being taken to distribute this on a regular basis. A new welfare fund has been started for the traditional pre-school teachers (nilathezhuthu asanmar) and lime shell workers. Steps were also taken to release the government share to various welfare boards. As part of the welfare funds for the anganwadi workers a new pension scheme has been created.

Liberal support to traditional sector

The UDF government adopted an approach which totally sidelined the traditional sector where lakhs of ordinary workers are employed. This government gives special emphasis to ensure sufficient budgetary allocation for coir, handloom and cashew industry.

In the history of the State, highest budgetary allocation for coir sector was made last year. In 2006-07, Rs.51.75 crore and in 2007-08, Rs.53 crore were allocated for this sector. In 2005-06 when the UDF left power, this was merely Rs.23 crore. The finance department has given full support to implement the special packages aimed at the revival of public sector units and cooperatives in the coir sector. The government loan of Rs.22.48 crore given to cooperatives was converted to joint shares. Interest to the tune of Rs.18.40 crore was written off. The pending arrears amounting to Rs. 15.27 crore as part of the NCDC loan were also converted as shares. This step was taken to create a clean balance sheet for the coir cooperatives and allowing them to take loans on commercial basis for proper functioning. The coir cooperative societies were given grants amounting to Rs.19.86 crore. For the revival of Coirfed Rs. eight crore has been allocated.

For the renovation of public sector units such as Capex and Cashew Development Corporation, budgetary assistance was provided. To pay the gratuity arrears of workers, Rs. 24 crore was released step by step to this sector. Tax waivers were also given to protect the industry.

Revival of Public Sector Enterprises

The UDF government had adopted the policy of privatising the public sector enterprises. But the LDF government is following the policy of reviving them. The Finance department has given full support to this by clearing the balance sheet of the companies and giving crucial guidance. In the last two years, great support has been given in the budget to clear the bank loans in a one-time settlement and getting working capital. Our government has spent Rs.102.79 crore during this period to protect the public sector. The budget 2008-09 has allocated Rs.50 crore for public sector unit revival and reorganisation.

Government employees, Pensioners

The government has adopted a friendly approach to government employees and pensioners unlike the past. We have inherited the backlash of the UDF policies which snatched away the welfare measures and rights of the government employees. We were able to correct these and ensure provision of improved welfare measures.

The UDF Government had implemented the pay commission’s report without any discussion. The result was reduction in the salary of the employees. To solve this, the last six scales in the pay structure were improved and an order was issued to this effect. This has benefited the last six pay grades including the part time employees. We have proved our commitment to those who get the lowest salary in service. Orders were issued to solve disparities arisen due to pay revision.

The wages of casual sweepers have been revised to Rs.1,000 from Rs.600. Part time sweepers’ posts were permitted in offices with more than 100 sq.m of sweeping area. The norms to assess the sweeping area of an office were also liberalised and thus the casual sweepers were raised to the position of part time sweepers. The government is committed to the protection of last grade employees.

Unlike in the past history of government employees, the arrears of dearness allowance (DA) was brought to nil. The dearness allowance announced by the central government in March is the only pending due. Never in the recent past had employees of Kerala had such an achievement. Many times during the UDF rule, agitations were carried out to claim DA arrears. In this fiscal year, employees and pensioners were paid 27 per cent of their basic pay as DA. In the last fiscal year, Rs. 2,948 crore was paid to clear DA arrears. Of the 32 per cent DA, 10 per cent was the arrears of the former government.

Accident Insurance Scheme for the government employees has come into force. On an annual premium of Rs.50, Rs. seven lakh is the sum assured. This scheme is also applicable to employees of aided educational institutions, universities, panchayats and municipal corporations.

LDF government has a humane approach towards the pensioners. For the first time in the history of the State pensioners received the DA arrears before the employees.

We hope that by August all are benefited from the one rank one pension scheme. Pension has been revised for the time being to give the benefits to all. It has been decided to give interest to the pension arrears due from1st April 2007.

Steps favouring the employees in identifying the vacancies of aided school and college sector for teaching and non-teaching staff are underway.

Tax department- income from tax

The approach is to increase the income from tax by improving the efficiency of tax administration. In 2005-06, the income from VAT was Rs.2,946 crore and this has increased to Rs. 5,132 crore in 2007-08. This is a growth rate of 74 per cent in 24 months. This is an all-time record even in the country. Entrance tax was the main component in the taxation of goods brought to the State. Following cbanks and it was decided to give more interest to senior citizens.

Kerala State Financial Enterprises

The Kerala State Financial Enterprises is on a path to progress and modernisation. The chit collection of KSFE in 2005-06 recorded at Rs.158 crore has been increased to Rs. 187 crore in 2006-07. In 2007-08, it has crossed Rs 260 crore. The Ponnona chits introduced during last Onam and the golden jubilee chits introduced last year exceeded their target. In the last financial year chit business exceeded Rs. 110 crore which is a remarkable achievement of KSFE in its history. This is the result of the joint efforts of the employees, management and the government. The additional target decided for the Pravasibandhu chits was Rs.15 crore, this has reached a record of Rs.44 crore.

Kerala Finance Corporation

The payment arrears in Kerala Finance Corporation (KFC) is being solved through one time settlement (OTS). Five hundred such cases have been solved through OTS. Two hundred and twelve units were sanctioned reviving packages. Loans to the tune of Rs.10,080 lakh were distributed till December 31, 2007. The growth rate is 205 per cent compared to the growth in the same period last year.

National Savings Scheme

The Central Government policies are creating hurdles in the National Savings Scheme. Non-increase of the interest rates and stopping the bonus of the monthly income scheme have drastically affected the Savings Scheme. The aim was to collect Rs.2700 crore as surplus funds. Due to these policies no money could be collected. This has led to a situation in which the lives of thousands of people who work for the National Savings Scheme have been affected. The pressures brought by the state government by bringing these people have brought some change. The Central Government was forced to reinstate the five per cent bonus for the monthly income scheme and tax concessions for five-year term deposits.