The Kerala Finance Minister’s Budget speech has been long on details. It has touched sectors and schemes in detail. Big and small allocations find a mention in the speech.
The speech, which began with reassurances for employees and pensioners had something sweet for them throughout. The Minister stated that Kerala’s fisc is seeing light at the end of the tunnel. The deficit and debt ratios are showing a downward path.
The Minister hopes that the devolution share by the 16th Finance Commission will be better than that by the 15th Finance Commission, stating that it cannot go down below the present all-time low of 1.92%.
This expectation seems well-founded, as Kerala’s per capita income rank among States has come down and even if the same formula used by the 15th Finance Commission is applied to the current data, Kerala’s tax share will be approximately 2.2%. But much depends whether vertical devolution share of States will go up from the present 41% as demanded by a large number of States or will it remain the same or decline.
The Budget has mentioned that developmental expenditure has not shrunk, but on the contrary, it has gone up. The optimism has been exuded on the aspect of 70% increase in own tax revenue (OTR) in the past four years. It cannot be missed here that the high buoyancy of OTR during 2021-22 and 2022-23 at more than 20% has later slowed down to single digit growth.
The State GST department has been making serious attempts to tone up administrative efficiency, but it may take some time to witness tangible results. There have been initiatives before the GST Council to address operational issues in inter-State GST and this needs to be closely monitored.
Certain additional resource mobilisation measures and a few concessions have been announced. The total additional resources estimated is at ₹300 crore, which is only 0.10% of the revenue gap. But it does demonstrate a will.
The Finance Minister has also pegged hopes on the apex court as regards the Union government’s policy of treating borrowings of the Kerala Infrastructure Investment Fund Board and Social Security Pension Company as State’s borrowings. One can only keep one’s fingers crossed as to when and how the court will pronounce its verdict on the same.
The Minister has laid down a vision with environmental protection, MSMEs, knowledge economy etc. The important announcement is that no investor shall turn away for the reason that land is not available. The land, with government, LSGIs and PSUs, have been identified for making it available to the prospective investor. Much again depends on the ease with which procedures are implemented in this regard. This aspect needs to be given importance.
If one expected a big bang populist pre-election Budget, that is not what this Budget has been. It goes on the continuum and announces vision and programmes on the time-tested dictum that government activity is continuous. It could as well be the belief that there is still time and there are other means for announcement of benefits.
(R. Mohan, a former officer of the Indian Revenue Service, is a commentator on federal financial and political relations)
Published - February 07, 2025 08:03 pm IST
