Fiscal Health of Kerala: Indicators

March 14, 2013 | By | Add a Comment

The fiscal health of the state is usually determined by revenue deficit, fiscal deficit and public debt. They are represented as a percentage of the state domestic product (SDP) or the state income. We have considered the time period from 2008-09 to 2012-13. The following table contains the revised estimates of 2011-12 and the budget estimates of 2012-13. All the data has been obtained from the State Government Budget documents. First lets consider the revenue deficit. A rising revenue deficit is an unhealthy trend. If we examine it in this light, the state’s revenue deficit is evidently decreasing. In 2009-10, the revenue deficit had increased upto 2.18%, while the very next year, it decreased to 1.38%, and then increased to 1.67%. In 2012-13, the revenue deficit almost halved to 0.89%. This points to a decreasing revenue deficit. In 2011-12, the fiscal deficit was 3.46%, while it was 2.74% in 2012-13.

 

Revenue Deficit  (in Rs cr)

Fiscal Deficit (in Rs cr)

Amount (in Rs cr)

% to GSDP

Amount (in Rs cr)

% to GSDP

2008-09

3712

1.85

6346

3.16

2009-10

5022.97

2.18

7871.62

3.39

2010-11

3673.87

1.38

7730.46

2.79

2011-12 (RE)

5471

1.67

11300.07

3.46

2012-13 (BE)

3466

0.89

10726.79

2.74

Sources: Budget-in-Brief documents of various years

 

Another indicator of fiscal health was the increase or decrease in public debt. In quantitative terms the total debt stock of the state is increasing. As shown in the table, in 2008-09, it was 63269.7crores. in 2012-13, it increased to 101179.2crores. In the last two years, the growth rate of debt was about 13%, which is not a good sign. However, as a percentage of SDP, the level of public debt since 2009-10 has come down. In 2009-10, it was 30.81%, while in 2011-12 it was 27.3%. In 2012-13, it is expected to come down to 25.8%. It shows that level of public debt is not at dangerous levels anymore.

 

In recent times, fiscal indicators show that the fiscal health of the Kerala Economy is relatively better. Since the enactment of the Fiscal Responsibility and Budgetary Management (FRBM) Act 2006, state governments should bring down the revenue deficits to zero.

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