Isaac's last budget could be harsh, yet pay revision will not be touched

As he is about to present his last full budget this tenure on February 7, finance minister T M Thomas Isaac has found his hands painfully tied.

Being an election year, Isaac would have loved to be seen as generous. Instead, given the perilous state of the economy, he would be forced to take unpopular measures.

Higher land tax, cap on government expenditure, freeze on postings, massive redeployment of government officials and a hunt for tax defaulters and suppressors are some of the measures already on the table. A decision on these would be taken in a week. “Some of these might find their way into my Budget presentation,” Isaac said.

Quinquennial burden

However, Isaac has ruled out any change in the five-yearly pay revision pattern. Economists had pointed out that if the government could not do away with pay revision, it should at least extend the validity of a pay revision to ten years instead of increasing salaries and pensions every five years. “The LDF manifesto had promised that pay revision would be done every five years. We cannot go back on that,” Isaac said.

Nonetheless, one potentially unpopular decision is near certain to be made in the 2020-21 Budget. The finance minister will in all probability dramatically enhance the tax on reclaimed land. As it stands, wetlands or paddy fields reclaimed before 2008 and had been regularised are taxed at a small percentage of the fair value of land.

Land to be taxed fairly

Isaac wants such lands taxed at fair value rates, like dry lands are. “Once a land is transformed, its value appreciates. This should reflect on the tax,” Isaac said. The government is also considering a proposal to revise the fair value

Besides pay revision reforms, a set of economic experts drawn from various fields, during a pre-Budget discussion here on Wednesday, had suggested a drastic compression of unproductive government expenditure.

Government or car showroom

Technocrat G Vijayaraghavan said that the government should stop purchasing cars. “In pace of that pay your officials additional travel allowances. Let them find their own car, employ their own drivers or use their own vehicle. Such a system would be far more inexpensive than purchasing new cars and maintaining them,” Vijayaraghavan said.

Though Isaac did not specifically respond to Vijayaraghavan's suggestion, the minister said unscientific postings in the education sector were a huge drain on the state's resources. He said nearly 30,000 new teaching posts have been created in the last four years. The minister's approximation was based on an internal report compiled by the Finance Department.

Proliferation of teachers


This spike in teacher postings was mainly on account of the 30:1 student-teacher ratio that was introduced during the UDF tenure. “Earlier it was 40:1 but the new ratio was brought in to essentially safeguard the job of protected teachers. But this temporary measure has now become the norm,” Isaac said. “The KER (Kerala Education Rules) has been so tweaked that even if one more student is admitted to a class of 30, the school can appoint a new teacher,” he added. Isaac said the KER would be revisited and necessary changes made.

What is even more serious is that such teacher postings are done behind the back of the state government. “In any other department, government permission is required even for a temporary posting. In the case of schools, the management only has to intimate the AEO (assistant educational officer),” Isaac said, and added: “This is why the government does not have any figures of the new postings done in the Education Department.”

Painless redeployment

The experts wanted Isaac to merge units, say Kerala Minerals and Metals Limited (KMML) and Travancore Titanium Products (TTP), that were essentially doing the same operations. They also wanted Isaac to merge all welfare boards into a single large institutions.

Knowing they were politically sensitive, the minister remained silent on these recommendations. He has in mind a more painless way of restructuring government bodies. The Local Self Government Department was the example he held up. He said the department was woefully short of staff. On the other hand, the department has certain wings that are unnecessarily overstaffed.

He was referring to two wings, namely District Rural Development Agencies (DRDAs) and performance audit. “The DRDAs have become redundant and even the last LDF government wanted it disbanded. Now it has over 500 largely under-employed staff,” Isaac said. Ditto with performance audit. “Their work is now done by the Local Fund Audit and still it holds over 500 employees,” Isaac said.

The minister's plan is to redeploy workers from moribund wings to areas where there is severe shortage. “We will see whether such redeployment is possible in other departments, too,” Isaac said.

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