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Kerala economy is grappling with 3 necessary issues; one is the reduction within the share of agriculture and allied sectors and sluggish performance of Industrial Sector in State income. The third is that the severe resource crunch faced by the state for endeavour development expenditure. In 2004-05, the share of agriculture and business in state financial gain was 17 November and 23rd respectively. However in 2013-14, the share of those 2 crucial sectors has declined to 9-11 and 200th respectively. In line with the national trend, business shows its worst performance within the last decade by showing a negative Growth in 2013-14 n 1970-71; the agriculture was the expansion engine of the economy with around 500th of the State income. However from eighties onward the share of agriculture began to diminish, for the most part as a result of fast demographic amendment and associated socio-economic changes. In 1980-81, the share of agriculture was thirty one.6% and it more reduced to twenty ninth in 1990-91. However from the last decade the deceleration of agriculture sector has been notably steep. In 2000-01, the share was reduced to18.25%. With the decline in agriculture
In the financial year 2015-16, Revenue Receipts inflated at 19.12% compared to 17.84% in 2014-15. This can be in the main attributed to extend in share of central tax resulting upon the advice of 14th Finance Commission. However, this windfall was partially set out by the decrease in arrange help to state arrange and extra commitments on account of state share of restructured centrally sponsored schemes. As per the budget estimate 2015-16, total receipts (other than borrowings) of Rs.77625.52 crore and borrowings of Rs.15605 crore were estimated. Against this, total expenditure commitment was targeted at Rs 95324.77 crore. But, State may realise total receipt of Rs.69213.37 crore solely against what was targeted. Since there was fall in revenue receipts as a result of declining trend of state’s own revenue and arrange grants and growing commitment of non-plan Revenue Expenditure, State had to depend a lot of on debt that resulted in inflated borrowings and alternative liabilities.
In the current fiscal 2016-17, revenue receipts were calculable at Rs. 84616.85 crore. As against this, State may collect only 59.57 per cent during April-December amount than 61.06 per cent throughout identical amount of 2015-16, which may be in the main attributed to fall in assortment of State’ own revenue, non-tax revenue and reduce in grants from Centre as a result of the changes in funding pattern of centrally sponsored schemes At the end of December, total expenditure has already crossed 59.52 per cent of budget estimate as at identical level of corresponding amount of previous year. The declining revenue assortment and growing expenditure commitment are major concern for the State. Deficit targets square measure the opposite major worry that hover higher than the State economy. Revenue Deficit, Primary Deficit and Fiscal Deficit have already crossed 68.12 %, 59.38 %; 63.14% of budget estimate respectively at the end of December 2016.
In order to suffice the declining trend of State’s own revenue, variety of revenue mobilization measures are initiated by the State throughout this business enterprise. On analysis of monthly revenue assortment throughout the period April-December, it’s evident that State’s own revenue began to obtain. However the impact of termination of high value currency notes declared by GOI in November, 2016 has command back the State’s economy. Collections from State’s own revenue slipped to negative growth of -16.33 % in December as compared to 19.80 % growth recorded in October 2016. State’s Own Non-tax revenue declined to 46.46 % of BE 2016-17 during Apr Dec compared to 50.74 % in corresponding amount of previous year. The State Own Non-tax revenue recorded a rate of growth of 17.43 % in October 2016 compared to the corresponding month within the previous year. However it declined to -46.95 % in Nov and – 59.16 per cent in Dec in 2016 as a result of ending impact. On the expenditure aspect, capital outlay recorded a growth of 12.41 % at end of December, 2016 and was below one per cent of GSDP. This clearly indicates that State has to invest a lot of within the capital works.
The Kerala fiscal Responsibility Act 2003 mandates that the Medium Term Fiscal Policy and Strategy Statement ought to be bestowed before the State Legislature once a year alongside the annual budget documents. In distinction with the lacklustre economic process throughout the past 2 years, the Indian economy is showing some indications of a possible revival. Despite that, many inherent issues, a number of that square measure legacies left by the past square measure slowing down the Economic Development in Kerala. At this juncture, making economical methods to develop Kerala into a state with a powerful Money foundation is imperative. The increasing divergence between financial gain and expenditure has plain led Kerala to its current state of economic problem. However, it’s neither doable nor prudent to be to a fault parsimonious as expenditure on the large development works current can not be curtailed. To ease the business enterprise Stress that Kerala is presently experiencing, many Tax Reforms and rigorous policies had to be adopted by the state administration throughout the business enterprise 2014-15. As a result of this, there has been a marginal increase within the aggregation within the last quarter of the 2014-15 on an year-on-year basis.
The perspectives set up for 2030 outlines the strategy to assist the State grow on par with a lot of advanced regions of the globe. The economic policies are going to be targeted on this strategy. The business enterprise policies of the govt. can specialise in designated thrust areas that are highlighted within the perspective arrange. In summary, the cores thrust in economic policy within the budget are going to be the following:
- Restoring the buoyancy within the agricultural sector
- guaranteeing crucial investments in Infrastructure-2/”>INFRASTRUCTURE
- creating attention reasonable to all or any Building a Digital Kerala
- Providing reasonable housing for the poor
- Promoting Entrepreneurship to boost EMPLOYMENT opportunities.
- Fulfilling the agenda of development with care.
Develop Sustainable Agriculture by increasing productivity and competitiveness may be a sine-qua-non for raising incomes and well-being of this and future generations. Increasing investments within the agriculture sector with happier take of Agricultural credit is one a part of this. One broad component of the economic policy are going to be to adopt measures for the rejuvenation of the coconut agriculture sector, that even now could be the mainstay of income for a large section of the Population.
The State is decided to consolidate the commercial enterprise position by revenue augmentation and rationalization of expenditure. the extra inflows from the recommendations of the fourteenth FC can provide leverage to consolidate the fiscal situation whereas the commensurate decline in arrange transfers will cause serious threats to the commercial enterprise Health of the State and impair its ability for enterprise the abundant required cost. The 14th FC has planned sure Fiscal Consolidation targets. Though the advice has not been accepted by the Union Government nonetheless and a sequent modification in fiscal responsibility legislation doesn’t appear to be close, the state shall take serious steps to follow the recommendations in letter and spirit for the higher fiscal management.,
Kerala PUBLIC FINANCE and Fiscal Policy
Public finance is the study of the role of government in the economy. It deals with the government’s sources of revenue, its expenditures, and its overall impact on the economy.
Public expenditure is the total amount of money that the government spends in a given year. It can be divided into two categories: revenue expenditure and Capital Expenditure. Revenue expenditure is the money that the government spends on its day-to-day operations, such as salaries, pensions, and interest payments. Capital expenditure is the money that the government spends on Investment projects, such as roads, bridges, and schools.
Public revenue is the total amount of money that the government collects in a given year. It can be divided into two categories: tax revenue and non-tax revenue. Tax revenue is the money that the government collects from taxes, such as Income tax, sales tax, and property tax. Non-tax revenue is the money that the government collects from fees, fines, and other sources.
Fiscal policy is the government’s use of Taxation and spending to influence the economy. The goal of fiscal policy is to promote economic growth, stability, and full employment.
Fiscal deficit is the difference between the government’s revenue and its expenditure in a given year. A fiscal deficit occurs when the government spends more money than it collects in revenue.
Public Debt is the total amount of money that the government owes to its creditors. It can be divided into two categories: internal debt and External Debt. Internal debt is the money that the government owes to its own citizens. External debt is the money that the government owes to foreign creditors.
The Fiscal Responsibility and Budget Management Act (FRBM Act) is an act of the Indian Parliament that was enacted in 2003. The FRBM Act aims to promote fiscal discipline and transparency in the management of public finances.
The Kerala Fiscal Responsibility Act (KFR Act) is an act of the Kerala Legislative Assembly that was enacted in 2005. The KFR Act is based on the FRBM Act and aims to promote fiscal discipline and transparency in the management of public finances in Kerala.
The Kerala State Development Policy and Finance Strategy (KSDPFS) is a document that outlines the State Government‘s medium-term development plan. The KSDPFS was prepared in 2016 and covers the period 2016-2021.
The Kerala State Budget is a document that outlines the state government’s annual financial plan. The Kerala State Budget is presented in the Kerala Legislative Assembly in February each year.
The following are some of the key challenges facing Kerala’s public finance and fiscal policy:
- High fiscal deficit: Kerala has been running a fiscal deficit for many years. The fiscal deficit is expected to be around 3% of GDP in 2022-23. A high fiscal deficit can lead to higher Inflation and debt levels.
- High public debt: Kerala’s public debt is around 30% of GDP. This is relatively high compared to other states in India. A high public debt can make it difficult for the government to finance its expenditure and can also lead to higher interest rates.
- Low tax revenue: Kerala’s tax revenue is relatively low compared to other states in India. This is due to a number of factors, including a low tax base and a high level of Tax Evasion. Low tax revenue makes it difficult for the government to finance its expenditure.
- Inefficient expenditure: Kerala’s expenditure is often inefficient. This is due to a number of factors, including Corruption, poor planning, and lack of transparency. Inefficient expenditure can lead to waste and leakages.
The following are some of the key reforms that are needed to address the challenges facing Kerala’s public finance and fiscal policy:
- Reduce fiscal deficit: The government needs to reduce the fiscal deficit by cutting expenditure and increasing revenue. This can be done by reducing subsidies, rationalising taxes, and improving tax compliance.
- Reduce public debt: The government needs to reduce the public debt by cutting expenditure and increasing revenue. This can be done by reducing subsidies, rationalising taxes, and improving tax compliance.
- Increase tax revenue: The government needs to increase tax revenue by broadening the tax base and improving tax compliance. This can be done by introducing new taxes, increasing rates of existing taxes, and improving tax administration.
- Improve expenditure efficiency: The government needs to improve the efficiency of expenditure by reducing corruption, improving planning, and increasing transparency. This can be done by strengthening institutions, improving systems, and increasing accountability.
The reforms outlined above will help to improve Kerala’s public finance and fiscal policy. However, it is important to note that these reforms will take time to implement and will require strong political will.
What is public finance?
Public finance is the study of the government’s revenues and expenditures. It includes the study of how the government raises money, how it spends money, and how it manages its debt.
What is fiscal policy?
Fiscal policy is the use of government spending and taxation to influence the economy. The government can use fiscal policy to stimulate the economy during a Recession or to slow down the economy during a period of high inflation.
What are the different Types of Taxes?
There are many different types of taxes, but the most common are income taxes, sales taxes, and property taxes. Income taxes are taxes on the income that people earn from their jobs, investments, and other sources. Sales taxes are taxes on the goods and Services that people buy. Property taxes are taxes on the value of the land and buildings that people own.
What are the different Types of government spending?
Government spending can be divided into two categories: mandatory spending and discretionary spending. Mandatory spending is spending that is required by law, such as Social Security and Medicare. Discretionary spending is spending that is not required by law, such as the military and Education.
What is the national debt?
The national debt is the total amount of money that the government owes. The government borrows money by selling Treasury Bonds. The national debt has been growing in recent years, and it is now over \$30 trillion.
What are the benefits of public finance?
Public finance can help to stabilize the economy, redistribute income, and provide public goods and services.
What are the drawbacks of public finance?
Public finance can lead to government debt, inflation, and inefficiency.
What are some of the challenges facing public finance?
Some of the challenges facing public finance include the aging population, Climate change, and Globalization/”>Globalization-3/”>Globalization.
What are some of the solutions to the challenges facing public finance?
Some of the solutions to the challenges facing public finance include raising taxes, cutting spending, and reforming the tax system.
Question 1
The main source of revenue for the Government of Kerala is:
(A) Income tax
(B) Sales tax
(C) Excise duty
(D) Custom Duty
Answer
(B) Sales tax
Explanation
The main source of revenue for the Government of Kerala is sales tax. In 2020-21, sales tax accounted for 36.5% of the total revenue of the state government.
Question 2
The main expenditure of the Government of Kerala is on:
(A) Education
(B) Health
(C) Social security
(D) Infrastructure
Answer
(A) Education
Explanation
The main expenditure of the Government of Kerala is on education. In 2020-21, education accounted for 23.5% of the total expenditure of the state government.
Question 3
The fiscal deficit of the Government of Kerala is:
(A) The difference between revenue and expenditure
(B) The amount of money borrowed by the government
(C) The amount of money spent by the government on development projects
(D) The amount of money spent by the government on social welfare schemes
Answer
(A) The difference between revenue and expenditure
Explanation
The fiscal deficit of the Government of Kerala is the difference between the revenue and expenditure of the state government. In 2020-21, the fiscal deficit of Kerala was 3.5% of the state’s GDP.
Question 4
The public debt of the Government of Kerala is:
(A) The total amount of money borrowed by the government
(B) The total amount of money spent by the government on development projects
(C) The total amount of money spent by the government on social welfare schemes
(D) The total amount of money owed by the government to its creditors
Answer
(D) The total amount of money owed by the government to its creditors
Explanation
The public debt of the Government of Kerala is the total amount of money owed by the state government to its creditors. In 2020-21, the public debt of Kerala was 35% of the state’s GDP.
Question 5
The debt-to-GDP ratio of the Government of Kerala is:
(A) The ratio of the public debt of the government to the state’s GDP
(B) The ratio of the revenue of the government to the state’s GDP
(C) The ratio of the expenditure of the government to the state’s GDP
(D) The ratio of the fiscal deficit of the government to the state’s GDP
Answer
(A) The ratio of the public debt of the government to the state’s GDP
Explanation
The debt-to-GDP ratio is a measure of the financial health of a country or state. It is calculated by dividing the public debt of the country or state by its GDP. In 2020-21, the debt-to-GDP ratio of Kerala was 35%.