The Hindu : Kerala model draws flak

Online edition of India's National Newspaper
Thursday, Sep 18, 2003

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Kerala model draws flak

By Our Special Correspondent

KOCHI SEPT. 17. The Kerala Government's penchant for withdrawing from social welfare sectors and from the much-acclaimed Kerala Model of development has drawn flak from some quarters.

The State, which recently passed the Kerala Fiscal Responsibility Bill-2003 which stipulated that the State should eliminate totally the revenue deficit by 2006-07 has an uphill task, as per the findings of a study conducted by the Kochi-based Centre for Socio-economic and Environmental Studies (CSES) here. The Act stipulates that the ratio of gross fiscal deficit (GFD) to gross state domestic product (GSDP) should not exceed 1.5 per cent. However the ratio was 7.3 per cent in 1999-2000 and the revenue deficit to GSDP ratio stood at 5.8 per cent.

The government's continuance with the softer option of borrowing more and more at increasingly usurious rates has also come in for criticism. Debt servicing accounted for 69 per cent of the fresh borrowings made to cover the GFD. The tendency to cut government expenditure from 2000-01 out of sheer compulsion in a haphazard manner was also causing problems, the study noted.According to K. K. George and K. K. Krishnakumar of the CSES, the deepening fiscal crisis in the second half of the Nineties was more on account of the low growth rate of revenue receipts in relation to the growth rate of revenue expenditure.Though almost all States are reeling under fiscal distress, the volume of such deficits in Kerala is much larger than in most other States.

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