CSES in Media

Study moots fiscal reforms

This report on CSES study was published in The Hindu on 05.05.2012

The fiscal situation of Kerala calls for more radical and comprehensive reforms, according to a study conducted by Centre for Socio-economic and Environmental Studies (CSES), Kochi.

The study done by a team led by K.K. George, chairman of CSES, mooted revamping of tax system, mobilisation of additional non-tax revenue, and better expenditure management.

The study which reviewed the finances of Kerala during 23 years, including the current financial year, pointed out that Gross Fiscal Deficit to Gross State Domestic Product (GSDP) ratio was higher in the case of Kerala in comparison to average of all States. The revenue deficit to GSDP also showed similar trends. In all the years, the ratios were higher for Kerala than for other States. The same trend is visible in the case of ratios of revenue deficits to total revenue receipts.

The ratios of interest payments to revenue receipt, an indicator of debt burden, show that Kerala’s burden is much heavier than that of the average of all States in 19 out of 20 years. During five years, interest payments exceeded more than one-fourth of Kerala’s revenue receipts. However, the ratio has been coming down since 2003-04.

The implications of fiscal crisis for development are further brought out by the per capita plan expenditure/ outlay of 17 major States during the 11th Plan. They showed that Kerala’s relative position was 12th among the States. In fact, the outlay was less than the all States’ average, the study said.