Hike in taxes certain, joint efforts must for financial health: Balagopal | Interview

Finance Minister K N Balagopal’s maiden Budget has given a new hope of revival to Kerala’s economy. CPM and Chief Minister Pinarayi Vijayan entrusted the important portfolio of Finance to the first-time MLA, who had already proven his mettle as a Rajya Sabha member.

Balagopal’s first Budget has enhanced the trust the party and chief minister had placed on him. The finance minister speaks to Special Correspondent Sujith Nair of Malayala Manorama in ‘Crossfire.’

Excerpts of the interview:  

Your maiden Budget has generally evoked a positive response. How do you view the response? Was the applause for the healthy Budget or an encouragement to a new minister?

I am a first-time MLA. The party (CPM) and chief minister have placed a huge responsibility on me. I will try to fulfill the responsibilities to the best of my abilities. I will be 100 per cent sincere. Our intention was to add to the previous Budget, Thomas Isaac had presented. Prominence has been given to recommendations for making the economy more vibrant. The Budget has generally been viewed as one that would help manufacturing in all sectors. I am happy to say that the Budget has evoked a positive response. The consideration that it was my first Budget, too, has evoked such a response.

KN Balagopal

The Budget is normally prepared after discussions with experts and organisations, and inviting suggestions from officials. Later, the chief minister has to be apprised before preparing the Budget speech. You prepared the Budget in just 15 days. How did you overcome the time constraint?

We were faced with a rare situation in which a Front, which had presented a pre-poll Budget, had to present another one after being voted back to power. Though C Achutha Menon government had a consecutive second term, the chief minister was not the same. But here, it’s the continuation of the Pinarayi Vijayan-led government. We decided to take forward the previous government’s projects and programmes with added vigour.

In fact, we did not get 15 days (to prepare the Budget). Normally, a new government used to get time till July to present its Budget. Since we already had a Budget (which Isaac presented in January) in hand, I decided not to make any changes, except adding a few recommendations. With the threat of COVID-19’s third wave looming over us, an understanding was reached in the first meeting with the chief minister itself to give more prominence to healthcare.

You are taking over from K M Mani and T M Thomas Isaac, both experts. Does it pose a challenge?

Definitely, it is a challenge. Thomas Isaac is an economist and teacher. How vast would be the experience of one who had presented 10 Budgets! K M Mani was a parliamentarian who know all the nitty-gritties of Assembly procedures. Being their successor has added to my responsibilities. C Achutha Menon presented Kerala Assembly’s first Budget in 1957. His presentation was also in June.

The Budget has not proposed any new taxes, and there are no means to increase revenues. But you have made several big-ticket announcements. How will you fund the projects?

The chief minister and the leader of the opposition have reached an understanding to divert Rs 3 crore each from MLA’s Constituency Asset Development Fund to COVID care. Kerala would get Rs 559 crore from a central scheme to upgrade hospital facilities. Hence, we have decided to earmark maximum funds to fight the pandemic.

We are expecting the economy to take a giant leap by December if we could overcome the second wave. Tourism sector will become active. Agriculture production should be ramped up. It’s true that the State’s finances are not in good health. We have significant debt, but we are not in the danger zone. We can say that the State has serious financial constraints.


The Budget has given a leg-up to the farming sector. Has your organizational role as the State secretary of Karshaka Sangham reflected more in the Budget than that of a minister?

It would amount to meting out injustice to my responsibilities as a minister. I am giving more priority to my role as the minister. Certain recommendations have been made without any compromise to revive the agriculture sector, which has been badly hit by the pandemic. My experience with the farmers’ organization helped in making such recommendations. Kerala’s agriculture sector needs out-of-the-box thinking. Rubber is the major revenue earner in the plantation sector. But we cannot sit back thinking that rubber is enough. Retailing banana chips alone will not bring benefits. We should have crops to produce raw materials also.

The effective implementation of Subhiksha Keralam has led to excessive production of tapioca in the State. At times, a kilogram of tapioca won’t even fetch Rs 5. If the farmer has to benefit, the tuber crop should sell at Rs 11-12 a kilogram. Earlier, we used to make starch from tapioca. Also, the sugar mill at Chittoor used to distill alcohol from sugarcane.

Currently, lakhs of litres of spirit, brought into Kerala, are sold after mixing water and tastemaker. Can we produce spirit from tapioca? Kerala has to discuss such possibilities. Let both UDF and LDF engage in such discussions. I am not instructing them to hold such talks. But Kerala should discuss more possible avenues of revenue for farmers.   

The common man may welcome hefty borrowings to meet the requirements. But economists are against such a move.

We need to borrow some money now to fight COVID-19 and also to overcome the pandemic crisis. Borrowing within the State’s capability is not against our policy. The current economic crisis may last five to six months more. Once the crisis is over, agriculture and industrial sectors should become active. It is for making them active that we have tried to bring in about Rs 10,000 crores, including subsidies. Under the present circumstances, we cannot adopt a stand that we will have programmes only by utilizing the tax revenues. It is not practical. Taxes will increase for those with income after the crisis. We will not take the State to a huge debt.

Can you confirm that taxes will be increased after the COVID crisis?

We have not decided on the sectors where taxes have to be increased. Most media reported that taxes will be hiked. They published such reports after realizing that there is no alternative other than increasing revenues. People’s income has increased. We are going into a situation where we have wealthy people and a poor State. Financial experts have opined, including in a webinar hosted by Manorama, that such a situation would not be beneficial to the State. I feel people will take up the responsibility themselves. They will do it for their State. We will have to find a few sectors to increase the revenue.   

There have been complaints that several major announcements made in Budgets were not implemented. We have been repeatedly hearing about coastal and Kuttanad packages. Why are they being repeated without their implementation?

We have announced only those packages that could be implemented. It requires the participation of all departments concerned and the people. We have announced a scheme to sanction loans up to Rs 1,000 crore for an interest of four to five per cent to manufacturing units in the agro sector. Mostly, cooperative societies will benefit from the scheme.

It, however, requires detailed homework by the departments of cooperation and agriculture, besides individuals. Even local issues are affecting big projects. A joint effort by the ruling and opposition Fronts is required to overcome such issues. If all of us get into it together like we have done during the floods, we can improve Kerala’s financial health. Major media houses, such as Malayala Manorama, can play a creative role in the efforts.

File Photo: REUTERS

Amendment to Land Reforms Act is necessary to experiment fruit and vegetable cultivation in the plantation sector. Are you sure of getting political approval for such an amendment?

Plantation crops do not mean those farmed in estates on more than 15 acres that fall under the Land Reforms Act. Suppose, I have rubber, and it’s not outside the said limits. The question is whether we need just rubber, tea and coffee? If I cultivate another crop, and it fetches money, what is wrong in it? The government and official machinery should inform me of its pros and cons. There was a time when almost everyone planted cocoa, leading to a fall in its price. If the same fruit is produced in one lakh acres, it would not be profitable. What we intended was that we need scientific studies on the possibility of marketing different crops.  

If planters—as you have mentioned in your news conference—are to benefit, isn’t land reforms amendment inevitable?

My statement should be seen merely as a recommendation to amend the Land Reforms Act or land limitation norms. We need to first decide on whether we want diverse crops. If workers are to benefit, plantations should remain as an industry. Several plantations have closed down. We need to discuss the circumstances in detail, and fast-track the decision-making process. The economy of the farming sector is of utmost importance.

The mention of direct allocation of Rs 8,900 crore to those who have lost their livelihood and income, and your later explanation have come under fire. Do you now feel that you have armed the Opposition to hit back at you?

No, I haven’t felt so. The recommendation should be viewed as my good intentions. The fund was meant to deliver money and essentials to those in crisis. The Opposition would repeat in the Assembly the comments they had made outside. It will give me an opportunity to make them understand my intentions. There had been no attempts made to hide any treachery as the Opposition had alleged. There were only good intentions.

The Budgetary recommendation to allow quarrying and sand mining to hike revenues has already created a feeling that it would lead to the degradation of the environment.

We won’t do anything that would harm the environment. Man and nature should co-exist, protecting each other. That doesn’t mean that man could not touch anything in nature. Any move in this direction will be from within the LDF’s perspective.

Your predecessors K M Mani and T M Thomas Isaac had given an artistic touch to the Budgets. But yours was straightforward and to the point, devoid of any artistic frills. Will this be your style?

A few poetic lines and quotes should be included in the Budget. I am not against it. Since Budget was prepared by adding some more recommendations to the existing one, I decided to wrap up the speech in an hour. I got only 10 days to prepare the Budget, and hence I felt it would be ideal to present it straight. Some poems are useful for presenting the Budget. They allow to present the Budget in different ways. 

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