The Hindu Business Line : Kerala's annual Plan fixed at Rs 6,210 cr

The Chief Minister, Mr Oommen Chandy, with the Deputy Chairman of the Planning Commission, Mr Montek Singh Ahluwalia, in New Delhi on Tuesday. - Ramesh Sharma

New Delhi , Dec. 13

THE Annual Plan of Kerala for the fiscal year 2006-07 was pegged at Rs 6,210 crore at a meeting between the Planning Commission Deputy Chairman, Mr Montek Singh Ahluwalia, and the Chief Minister, Mr Oommen Chandy, here on Tuesday.

While appreciating the State's efforts in human resource development and also improving the financial health of the State Electricity Board through total metering and loss reduction, Mr Ahluwalia also recalled Noble Laureate Dr Amartya Sen's praise for Kerala's record in social sector.

The State was directed to integrate missions announced by the President of India, when he visited Kerala, in the State Plan and for this purpose, a one-time additional Central assistance of Rs 50 crore was provided, against the State's request for Rs 150 crore; more than Rs 52.03 crore has been disbursed so far, in order to launch the missions from January 1, 2006.

A background note prepared by the Plan panel for discussion said the State has not been able to fully operationalise mechanisms to curtail revenue expenditure, despite adopting fiscal responsibility legislation. It said that rigidities of the extant system and strong opposition to reform measures hamper access to structural adjustment lending.

"Borrowings are channelled into expenditure which yields little budgetary return. As a result, debt ratio and debt servicing commitments are above average and outstanding borrowings are almost double the total revenue receipts in Kerala. This is likely to affect the creditworthiness of the State and constrain Plan performance," the note said.

It also said that poor Plan expenditure is mainly due to financial constraints. The State is burdened with heavy pension commitments and salaries; pensions and interest payments pre-empt as much as 94 per cent of its revenue receipts.

In his remarks, Mr Chandy said that the State had set in motion a slew of measures to mobilise more resources and follow prudent financial management. This includes enactment of the Fiscal Responsibilities Act, controlling fiscal deficit, re-establishing proper budget cycle and rationalising power tariffs.

He said that the State was being penalised for better performance on social, health and power fronts, and requested the Plan panel to support the State's case with the Government of India "for not imposing an unrealistic criteria of debt stress, unilaterally, to disallow our proposal for raising external loans".