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.

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