The revenue deficit of Kerala Government recorded a decline in 2005-06 as compared to that in the previous year.

The revenue receipts during the year grew by 13.3 per cent to Rs 15,295 crore from Rs 13,500 crore in 2004-05. On the other hand, the revenue expenditure grew only by 7.3 per cent.

This resulted in a reduction in revenue deficit to Rs 3,129 crore from Rs 3,669 crore in the previous year, according to the report of the Comptroller and Auditor General of India for 2005-06.

The fiscal deficit of the State Government also came down from Rs 4,452 crore in 2004-05 to Rs 4,181 crore during the year.

The share of the State's own taxes in the revenue receipts declined to 63.9 per cent from 66.4 per cent in the previous year. At the same time, Central tax transfers and grants-in aid increased to 30 per cent in 2005-06 from 27.5 per cent in the preceding year.

As much as 72 per cent of the State's own tax revenue was contributed by taxes on sales, trade, etc., followed by stamps and registration fees (12 per cent) and State excise (nine per cent) and taxes on vehicles (six per cent).

The revenue expenditure constituted 94.3 per cent of the total expenditure during the year. The share of capital expenditure was only 4.2 per cent on an average during the last five years from 2001-02 to 2005-06, notes the CAG report.

During the five years, the committed expenditure on pension, interest and salaries constituted 80 per cent to 94 per cent of the revenue receipts, which indicated the lack of funds available for socio-economic developmental activities.

The salary expenditure in 2005-06 increased by five per cent over the level in the previous year and accounted for 37 per cent of the revenue receipts.

Expenditure on salaries had gone up by 35 per cent from Rs 4,164 crore in 2001-02 to Rs 5,606 crore in 2005-06.

The fiscal liabilities of the State Government increased by 66 per cent during the five years and stood at Rs 48,180 crore in 2005-06. This was 3.2 times of the revenue receipts and also amounted to 43 per cent of the gross State domestic product (GSDP).

The rapid rise in fiscal liabilities resulted in the interest payments having gone up by 53 per cent from Rs 2,489 crore in 2001-02 to Rs 3,799 crore in 2005-06.

Though the State Government could reduce the revenue deficit and fiscal deficit in 2005-06 as compared to the previous year, it should resort to additional revenue mobilisation, reduction in non-developmental revenue expenditure and proper debt management so as to achieve the targets envisaged in the Kerala Fiscal Responsibility Act, 2003, says the CAG report.