THIRUVANANTHAPURAM: An idealistic budget with an overdose of populism. This, in nutshell, is Kerala budget for 2017-18, presented by Finance Minister T M Thomas Isaac in the Assembly on Friday.
Political controversies over the leak of the speech apart, the budget also raises a pertinent question: Can the budget use an outside body - KIIFB or Kerala Infrastructure Investment Fund Board, in this case, to raise money for almost all its capital expenditure requirements?
A glance through the 144-page-long budget speech shows ‘KIIFB’ is being used as a proxy for building roads, bridges, rail network and port infrastructure. The underlying strategy is easy to fathom. The government’s finances have hit the threshold prescribed by the Reserve Bank of India (RBI), and use of an external body is being used to circumvent the rule.
Consider this: RBI has prescribed 3 per cent fiscal deficit and zero revenue deficit of GSDP under the Fiscal Responsibility and Budget Management Act. Kerala’s respective figures stand at 3.51 pc and 1.96 pc of GSDP respectively as on 2015-16.
“No attempt is being made to reduce the revenue deficit while there is an excess of populism from internet to subsidised rice and social security pension,” said Joseph K V, a former member of the Kerala Public Expenditure Committee.
There are others who are more critical. “This is a KIIFB-budget. Last year, the government announced it would raise Rs 20,000 crore and spend Rs 2,500 crore through KIIFB in 2016-17, but in reality it could only raise Rs 1,024 crore. This year too, nothing will happen,” said V K Vijayakumar, investment strategist, Geojit.
The hopes of turning around PSUs too will remain a dream. Lastly, the big plans of using NRI money for construction of coastal highways through KSFE will also not be an easy task.
“The Gulf sector is facing a slowdown. Further, if I’m an investor, I’ll look at the finances of the Kerala Government and it’s not a pretty picture. I’ll not invest in these ‘Pravasi Chitti,” said Vijayakumar.
“If wishes were horses, beggars would ride,” summed up Joseph.