Thiruvananthapuram: The Kerala Budget for the financial year 2021-22 has been touted as one with an eye on the state elections to be held in a few months. Whether the Left Democratic Front (LDF) government retains power or not, the next ruling dispensation will have to present a new budget. So this budget with its so-called please-all provisions in effect is more of an election manifesto and it was likely intended to be only that considering the seeming improbable measures announced.
Finance Minister Thomas Isaac did not annoy anyone by imposing additional taxes. New projects were announced to the satisfaction of all sections and to ensure development in every nook and corner of the state.
Continuing with the welfare agenda being executed by the government so far, Isaac on announced raising welfare pensions, expat-friendly programmes and more ration benefits in the state budget.
Where's the money?
When he came out of the legislative assembly on Friday after presenting the budget, the minister was asked a pointed question. "Where will you find the money to implement so many projects and schemes? "We will mobilize money by cutting down expenditure," he remarked.
For the past four-and-a-half years the government did try to cut down expenditure but could not succeed. The plans that had been announced were cut short. Now the question remains as to why a government which cuts the plan size and resorts to borrowing to overcome fund shortage, is making such grandiose announcements?
Most schemes that have been proposed can only be implemented utilising the resources mobilised from within the budgeted provisions. So far Isaac had relied on the Kerala Infrastructure Investment Fund Board (KIIFB) to finance large public infrastructure projects. The latest budget has not many schemes under the KIIFB which had held Isaac in good stead with the last five budgets presented by the Pinarayi Vijayan government.
The minister presented a budget of Rs 1.5 lakh crore outlay of which Rs 30,000 crore is to be raised through borrowing. Last year it had set a target of borrowing Rs 32,000 crore. However, with the central government refusing permission for additional borrowing the state could borrow only Rs 35,000 crore.
With the Centre not going to allow additional borrowing next year too, the state will have to go forward as per the current budgetary provisions and this could land the government in grave financial crisis. Strict treasury control would also be required.
Liquor tax avoided
The liquor tax was avoided as part of a strategy to ensure that there is no announcement in the budget which would adversely affect any section of the people.
However, a few days ago the state monopoly on liquor, Kerala State Beverages Corporation Limited, had got the nod to raise the basic price of liquor by 7 per cent. As a result there will be a hike of Rs 100 to Rs 200 per bottle.
Another deft move
The excise minister had publicly said last week that he would reduce the treasury interest rate from 8.5 per cent to 8 per cent. However this too did not figure in the budget. The plan is to make changes in the treasury interest rates through an order.
The government which gave higher additional interest rates to attract investment even during the period of financial crisis is now reducing the interest rates to avoid additional liability despite getting the opportunity to borrow more.