LDF says there is no money to run Kerala govt, but the Left is also guilty

Like a great many things in India, a “white paper” is a British legacy. And like in the case of a great many such legacies, India has made the white paper different from what the British meant it to be. By British definition, it’s a document that a government brings out with the facts of a matter before enacting legislation on the subject. This is different from a green paper which may only have certain ideas that a government wants people to comment on.

In India, a white paper is packed with statistics like in the UK. But, as American humourist Evan Esar once said, statistics is the science of producing “unreliable facts from reliable figures”. So white papers can be—and often are in India—used as potential political weapons with a ring of menace to them.

The one tabled by Kerala’s new CPM-led Left Democratic Front (LDF) government on the state’s finances is one such.

This is not to suggest that what the LDF’s white paper says isn’t true. Of course, it is.

It says the state is flat broke: it hardly has any money to even meet the day-to-day expenditure. Consider these figures:

--The state’s closing balance on 31 March: Rs 1,643.99 crore
--Payments blocked at treasury: Rs 1,800 crore
--Net cash balance is negative: - Rs 173.46 crore
--State’s immediate liabilities (payments to banks, for social security pensions and land acquisition etc): Rs 6,302 crore
--Short-term liabilities (road projects, paddy procurement dues, salary hike arrears etc): Rs 4,326 core.
--State’s public debt: Rs 1.5 lakh crore.

File photo of Thomas Isaac. Image courtesy: news18.com

File photo of Thomas Isaac. Image courtesy: news18.com

Finance Minister Thomas Isaac described the situation as “alarming”. His alarm then turned into anger against the previous Congress-led United Democratic Front (UDF) government which ruled Kerala from 2011 to 2016 and which, he said, was squarely responsible for this fiscal predicament.

Isaac’s observation that UDF wrecked the economy is based on “facts”. Bureaucrats compile white papers, taking figures from official data. But sometimes “facts” make better sense when they are read with “other facts”.

For these “other facts”, you need to go back to another white paper that former chief minister Oommen Chandy came up with after he took over in 2011. He too painted a very grim picture of the financial situation which prevailed at that time and which he inherited from the LDF government of Chief Minister VS Achuthanandan, which ruled the state from 2006 to 2011.

In parts, Isaac’s white paper seems like a response to Chandy’s. Now you understand how a seemingly innocent white paper can be used as a political guided missile.

Isaac makes a pointed reference to the fact that Chandy spent Rs 700 crore to Rs 800 crore on his pet “mass contact” programme. Such expenditure added to the rise in non-plan revenue expenditure, he said. He is right.

Chandy’s own paper had cited a long list of things as examples of “unproductive” and “indiscriminate” spending by the earlier LDF regime. He was right too.

And when the new finance minister says that Kerala is bankrupt and is “living on a financial lie”, he is not revealing anything startlingly new. The Chandy government almost said so itself in 2013 and announced austerity measures. Among other things, he curbed foreign travel and insisted that officers used only hired vehicles.

At that time, the Left wanted a second White Paper on the state’s finances, a demand which Chandy flatly rejected.

But by 2014, Chandy forgot all about cost-cutting. Succumbing to compulsions of elections, two years away, and to the need for populism, his government went berserk and announced scheme after scheme to grab headlines and win over vote banks, unmindful of the nearly empty treasury.

It’s true that Chandy was saddled with populist, resources-draining schemes of the previous Left government. He was not only forced to continue with the schemes but, to match them or even outdo them, he announced new ones. In the case of the present government too, as Isaac admits, it would be impossible to totally curb the revenue expenditure that Chandy had committed to the social sector.

This has been the story from one government to another in Kerala for a pretty long time, with LDF and UDF alternating as the ruling party. You get a bad economy from your predecessor, make it worse and then pass it on to your successor.

The state’s debt was approximately Rs 24,000 crore in 2001 when LDF Chief Minister EK Nayanar handed the reins to AK Antony of the Congress. And by the time LDF’s Achuthanandan took over five years later in 2006, the debt rose to Rs 50,000 crore. When Chandy became the Chief Minister in 2011, it was nearly Rs 75,000 crore, but he managed to double it to the current Rs 1.5 lakh crore in his five-year rule

At the very centre of Kerala’s bankruptcy has been competitive populism. Politics overrode economics. The Left falsely interpreted Marxism to mean reckless announcement of “welfare” schemes and “concessions’ which, in fact, either ended up serving vested interests or groups—or were cornered by the rich.

And the Congress blindly followed suit. The LDF and the UDF competed with each other to push Kerala into a fiscal predicament of a kind seen nowhere else in India.

But the people of Kerala are now hoping that CPM’S Chief Minister Pinarayi Vijayan will undo or check the damage. Vijayan is no run-of-the-mill politician. His utterances and actions during the one and a half months that he has been the Chief Minister have raised hopes that he will not let himself be guided by conventional Marxism. He is ready to take the path of social democracy laced with capitalism, if it means Kerala’s development.

His finance minister too is not an average politician. Isaac has a doctorate in public finance from the Thiruvananthapuram-based Centre for Development Studies, affiliated to the Jawaharlal Nehru University. Many of Isaac’s ideas are driven by a communist perspective, but he means business even if he conducts it in his own style.

But to stop Kerala’s finances from going deeper into the red, you need no ideology. You just need to stop wasting money, raise resources and step up tax collection. Dr Isaac knows that.

Author tweets @sprasadindia

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Updated Date: Jul 02, 2016 12:50:28 IST

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