Options open to tackle fiscal crisis: FM

By Our Staff Reporter

KOCHI, JULY 3. Encouraging the private sector does not mean dumping the public sector. But no government can allow loss- making public sector units in the same condition.

This was stated by the Finance Minister, Mr. K. Sankaranarayanan, here today. He was inaugurating the open forum on the White Paper on State Finances released by the Government.

Out of 130-odd public sector units, only 6 or 7 were making profit. For instance, the Kerala State Electricity Board incurred a loss of Rs. 160 crores every month. The White Paper presents options to meet the financial crisis faced by the State, and no decision has yet been taken as to how to tackle the situation, the Minister said. Raising power charge or bus fare was only an option which is open to deliberations. Imposing unaffordable tax is not in the agenda of the UDF Government, Mr. Sankaranarayanan said.

The Minister pointed out that the Left-ruled West Bengal has become investor-friendly. Why can't we have engineering and medical colleges in the private sector, he asked. Information technology and similar avenues will open up employment potential. Kerala has 40 lakh unemployed youth, he pointed out.

He said the current financial crisis was an unprecedented one in the history of the State. The White Paper is based on the report by the Comptroller and Auditor General. Referring to the LDF observation that meticulous collection of taxes will help tide over the crisis, the Minister wondered why the Left could not implement the same. Touching on the question of Central aid, he said, ``We will get the dues, but there will be no confrontation with the Centre''. No decision has yet been taken on the liquor policy, the Minister said. He also affirmed that the economic scene will take a turn for the better within six months.

The Information and Parliamentary Affairs Minister, Mr. M.M. Hassan, who presided over the function, said even the LDF had admitted that there was a financial crisis by way of issuing a `counter white paper'. The LDF, by explaining that the crisis can be overcome by the collection of tax dues, has admitted that the LDF Government had failed in its job, the Minister said.

Accusing the State Government of inflating figures, the assistant State secretary of CPI, Mr. Paniyan Ravindran, said Kerala's debt position was not too bad as there were 10 other States which had a higher debt burden. Kerala had spent for development projects. The Government is trying to lead the State on the path of privatisation. Mismanagement at the top level involving IAS officers is one of the key reasons behind the public sector's failure, he contended.

Though the UDF claims to have handed over an economy with surplus funds to the LDF regime in 1996, about Rs. 700 crores had to be given to the Public Works Department, he said. Attacking the liquor policy, he said the Government is unable to prevent the sale of `seconds'.

The former Finance Minister, Mr. C.V. Padmarajan, blamed the LDF Government for ignoring the warnings given by financial experts and violating the financial discipline. Mr. I.S. Gulati, economist, had made a statement corroborating this, he pointed out. The LDF was extravagant in organising programmes like `Manaviyam', he said.

Mr. M.N.V. Nair, former director of Indian Institute of Management, Bangalore, said the present crisis is the culmination of the failure of budgetary system. Borrowing should be done only for projects which can generate revenue and it is not a means to fill deficit. More than 80 per cent of the State income is spent on salaries and pension, he said. Kerala does not need 20 ministers, he pointed out. There is excess staff in top police echelons as well. The retirement age was fixed at 55 when the average life expectancy was 30, but now that the latter had more than doubled, the former has to be raised. There is no need for quite a number of corporations which are only white elephants.

In the power sector, the administration cost here is 30 per cent of the turnover while it was only 3 per cent for the BSES, the power supply agency of Bombay, Mr. Nair pointed out.

Mr. C.J. Jolly, Chairman of Confederation of Indian Industry (CII), Kerala, said borrowing to meet expenditure is bad economics. He also stressed the need for tariff regulatory commission in the power sector as has already been in place in 15 States.

Mr. M.K. Das, journalist, said the roots of the financial crisis is decades old. The `Kerala model' does not present productive investment. He blamed the politician-trade union nexus for the failure of public sector managements.

Mr. Noble Mathew, Mr. V. Balakrishnan, Mr. M.C. George, and others spoke on behalf of the public.

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