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
- 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.