Mani cautious about utilising public account

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THIRUVANANTHAPURAM: Finance Minister K M Mani's 'White Paper' has signalled an about turn from the LDF's radical approach to the u..

THIRUVANANTHAPURAM: Finance Minister K M Mani's 'White Paper' has signalled an about turn from the LDF's radical approach to the utilisation of the Public Account.
Former Finance Minister T M Thomas Isaac had used the swelling Public Account as an innovative tool to tide over capital constraints. K M Mani, on the other hand, feels this approach would put the state's finances under stress and wants the government to merely function as a trustee of the account. The Public Account is made up of all the money received by the State Government, other than those to be credited to the Consolidated Fund. Nearly 85 percent of the Public Account is formed by State Provident Fund and Treasury Savings deposits. Mani, in his 'White Paper,' criticised Isaac for utilising the Public Account extensively and for mobilising more funds to the account from welfare boards and other government institutions with the promise of an interest rate higher than what is payable on open market borrowings. The Finance Minister points out that the account is highly volatile and that it can upset the financial planning of government if funds are withdrawn at large scale.

Elaborating on his Public Account strategy in the book 'Keralam: Mannum Manushyanum,' Thomas Isaac had mooted a radical approach: ''At a time when the Centre is putting curbs on the finances of the state, this public account comprising small savings and provident fund offer the state greater freedom. By improving the quality of service and offering fair interest rates, the state could attract more such deposits. This in turn will pump in more money to the budget to be used as capital expenditure.'' Isaac's approach is validated in the Kerala Public Expenditure Review Committee Report 2010.

''We understand that the Government of Kerala has effectively used and tried to enhance accruals under the Public Account by allowing higher interest rate for Treasury Savings bank deposits. This is an obvious choice given the limited borrowing powers of the state and when there is little scope to enhance revenues further in the short run,'' it says.