Gita advises Kerala to tighten belt, GST not to blame for state’s bad finances
TRIVANDRUM: Harvard economist Gita Gopinath has warned Kerala to be cautious on spendings for the deep iscal crisis the southern state is in.
Rejecting the practice of inance minister TM Thomas Isaac blaming the Goods and Services Tax (GST), she said Indian economy would start reaping beneits of the new tax regime within six months.
The widely-recognised academic whose roots are in the northern district of Kannur is the handpicked economic advisor of chief minister Pinarayi Vijayan. She was here to attend the two-day World Kerala Assembly that concluded on Saturday.
“I give advice and whether it is taken or not is a separate point. I don’t think just because I’m giving advice things are going to go ine,” she told reporters here, expressing her concern about the state’s failure to manage revenue deicit.
“This problem began before the GST, so its problematic. You can’t blame it on GST for the increase in revenue expenditure. The growth and expenditure need to be taken care of. In the long run, I think GST will be good for Kerala in terms of raising revenue.” The inance minister also admitted that uncontrolled expenditure expecting growth in revenue led to the iscal crisis. He said he was going to end that practice in the upcoming annual budget.
Gopinath, however, observed that the sudden withdrawal of high-value currencies in 2016 by Prime Minister Narendra Modi had its impact on the economy negatively, though it gave out an impression that the government was serious about cracking down on black money.
“The budget has to address the iscal situation for sure. On the revenue side, the GST will start impacting positively after six months or so,” she said.
The state has been spending heavily on exchequer draining public sector entities and on salaries and pensions to keep a notoriously ineficient bureaucracy in good humour.
It was also borrowing heavily nudging the industrially laggard state into a debt trap. To overcome the federal limits to borrowings, it is now scouting for diaspora funding through the Kerala Infrastructure Fund Board (Kifbi) without much success.
Chief minister Pinarayi Vijayan addressed the concluding session offering to set up a single-window scheme for investors, setting up a chamber of commerce for them and projects for return migrants.
Top bureaucrats led by chief secretary Paul Antony sat in a circle between the podium and the “members of the house” taking notes of the proceedings like in the legislative assembly.
The proceedings began with the reciting of the national anthem and the chief secretary, designated as the secretary of the house, read out the declaration of its formation and invited the speaker, the leader and deputy leader to the podium.
Some delegates welcomed the arrangements while others found it awkward bordering a farce, taking the sheen out of serious discussions. The speaker announced the beginning of the session.
They chose deputy speaker V Sasi, Anto Antony MP, expatriate entrepreneurs Yusuffali MA, M Anirudhan and CP Haridas and ilm star Revathi as members of the presidium.
“This is the irst event of its kind to be held in the country. This would be held once in two years,” Vijayan said.
“The discussions and deliberations that take place in the next two days, could well be an engine for the future growth of Kerala.”
Governor P. Sathasivam addresses the valedictory function of World Kerala Assembly on Saturday.