Finance Minister K M Mani’s record 12th budget stands apart for two reasons: Its emphasis on the agricultural sector and the boost for entrepreneurial aspirations of the youth. The budget, which has included many projects, offered freebies and a hike in welfare pension programme with an eye on Lok Sabha polls, also doesn’t turn a blind eye towards the State’s alarming financial position.
The last budget’s estimated revenue increase hasn’t happened and the expenditure has in fact increased, which are reflected in this budget. The finance minister seems to be in sync with expert opinion that if Kerala’s economic condition, which is overwhelmingly dependent on sales tax levied on oil, gas and lottery sales, is to improve it should tap other revenue sources and make tax collection more effective. The finance minister’s main source of resource mobilisation as proposed in the budget seems to be an increase in vehicle tax, and taxes on IMFL and edible oil.
While stamp duty was earlier brought down to check deliberate undervaluing of land sale, there were no attempts to put in place a mechanism for determining the fair price of land. Since this has eroded the collections from stamp duty, the budget has proposed that law should be amended to increase fair price of land. It has also hiked the one-time tax for constructing huge buildings. As a follow-up to the projects announced in the last budget to attract farmers to high-tech farming, the budget has made provisions for interest-free loans and subsidies for modern technology-based projects like vertical farming.
At the same time, it emphasises the need to review the state of high-tech farming and take measures to fix the deficiencies. Another prudent move is the Rs 100 crore envisaged for small scale irrigation projects and rain water harvesting projects. The budget has proposed a 47 per cent hike in allocation for diary development from the previous year. This amount should be efficiently utilised to undo the harm caused by the outbreak of foot and mouth disease, increase milk production and achieve self-sufficiency by initiating creative projects. Another proposal is to set up Milma model cooperative units to market agricultural products.
The government will also bear 90 per cent premium of crop insurance of small-scale farmers. Though this is a welcome move, the farmers would benefit only if the procedures are simplified.
Though the previous budget had envisaged that revenue deficit would be brought down to zero next year, from the estimated Rs 2,269 crore, as per revised estimates it has jumped to Rs 6,208 crore. Since the revenue deficit estimated for the next financial year is Rs 7,131 crore, it is clear that the State cannot implement the Fiscal Prudence Act. The debt has shot up to Rs 1,14,00 crore. If the financial woes of the state, which the minister himself has acknowledged, deepens many projects will have to be pared. Since project implementation has gone haywire this year also, the state may not be able to achieve the planned basic infrastructure development. So the state should avoid unnecessary expenditure and make all efforts to stick to fiscal prudence.