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Kerala Budget 2018: Good balance between welfare and fiscal prudence

The capital expenditure as a percentage of state output has increased which will help in improving productivity and ensure sustainable growth of the state economy.

Published: 03rd February 2018 01:28 AM  |   Last Updated: 03rd February 2018 03:53 AM   |  A+A-

Hotel owners can now reduce the price of food items as the rate of chicken will be slashed to `87 from Monday,” he said.

Kerala Finance Minister Dr TM Thomas Issac (File Photo)

By Express News Service

KOCHI: Finance Minister Thomas Isaac has succeeded where the Union budget has failed. The state budget has managed to bring down fiscal deficit from 4.3 per cent last year to 3.3 per cent this year and set an even lower target of 3.1 per cent for next year. This will help the state bring down its debt and interest obligation in the years ahead. It is heartening to see that this fiscal prudence is accompanied by a reduction in the revenue deficit through efforts such as rationalising subsidies by eliminating the undeserving from social security and ration priority lists.

Dr Rudra Sensarma

At the same time capital expenditure as a percentage of state output has increased which will help in improving productivity and ensure sustainable growth of the state economy. The `2,000 crore allocated for coastal area development by way of developing infrastructure, fisheries sector, health and education will have huge multiplier effects on job creation and living standards of the people. The initiatives for promoting tourism and start-ups are welcome but cannot be sustained unless there is significant improvement in the business climate of the state.

My own research with a colleague in IIM had identified non-tax revenue collection as a weakness of the state government. Hence I am pleased that there are efforts such as the amnesty scheme for vehicle registrations in other states and re-introduction of land tax which will bring `100 crore each to the state exchequer.

But I am disappointed that these hard gained revenues will be frittered away in the form of a `1,000 crore grant to the KSRTC which is unlikely to solve its problems but will divert valuable public funds which could have been used for the state’s development. Overall I am satisfied that the Finance Minister has been able to maintain a good balance between welfare orientation and fiscal prudence.



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