THIRUVANANTHAPURAM: Kerala’s Left Democratic Front (LDF) government will promote private investments without any limirts in small as well as large infrastructure projects to overcome the impact of the global economic meltdown on the state.
“I’m going to place this in my budget for the next year. There should be a consensus on this both in the government and the (ruling) party,” Finance Minister Dr. Thomas Isaac said addressing a meet-the-press program at the press club here. “We are left with no alternative to accelerating growth in such trying times.”
The minister said the focus of the LDF government would be on raising capital expenditure during the rest of its tenure in projects like ports, airports, roads and software parks. The government would also take up a slew of welfare measures once its finances improved.
“We are in a chaotic situation and we have to discuss the matters with all concerned,” the minister said when asked if the shift in the left government’s policies would draw opposition from Marxist party leaders like Chief Minister VS Achuthanandan. Isaac said he would resort to extra-budgetary means to increase public investment in the state. An increase in treasury deposits is one of the extra-budgetary means the finance minister has in mind to mobilize money for public investment.
Another strategy is to goad various government organizations like Roads and Bridges Corporation, Coastal Development Corporation and public consortiums to seek as much loans as possible.
The government is targeting doubling of capital expenditure from one percent of the gross state domestic product as of now to two percent at the end of the current fiscal year. The capital expenditure was 9 billion rupees in 2006-07, which rose to 15 billion rupees last year. This is expected to touch 30 billion rupees at the end of this year.
The projects identified include a 7.5 billion rupee-drinking water project, fishing harbors costing 2.5 billion rupees and rail overbridges at an outlay of 2 billion rupees besides acquisition of land for the proposed 2000-acre international airport in Kannur, expansion of Kozhikode airport and the mother port at Vizhinjam.
The federal government has agreed to consider the proposal submitted by Kerala to raise the borrowing limit of the state from the public sector banks by 20 percent to be utilized for the infrastructure development.
“We are already anticipating a loss in the revenue from taxes to the tune of 10 billion rupees. If the cap on the loan limit is raised by 20 percent, the state government expects an additional 15 billion rupees that can be fully utilized for capital expenditure,” he said.
Isaac blamed the federal government for launching schemes that are not suitable for the states, without proper financial backing. “The federal government has framed policies and schemes having implementation costs much higher than what are being granted for the states”, he said.
