Dr Thomas Isaac in his budget speech exuded confidence in the private corporate investment and MNC investment coming to the state. This is refreshing and desirable, coming as it does from a person and a party leader who has always been anti-corporate and anti-MNC.
Of course, from the Communist perspective anti-business stand is the correct one. When the Narasimha Rao government initiated liberalisation in the early 90s, those so-called ‘neo-liberal reforms’ were vehemently criticised by the Left, and Dr Isaac in particular, as being corporate and MNC-friendly.
The FM in his budget speech particularly referred to MNCs like Nissan, Taurus, Fujitsu etc. and some of India’s corporates leading investment in the state. This is a welcome change and needs to be appreciated.
The criticism levelled against the budget that the 1 per cent cess is inflationary is not valid.
This will not add to inflation since inflation in India (CPI inflation in December at 2.13 per cent) is one of the lowest in recent times. The Central government’s fiscal consolidation and RBI’s hawkish monetary policy has contributed to the sharp decline in inflation.
However, the Achilles heel of this budget is the totally unrealistic assumption of a jump in GST collection by 30 per cent in FY20. The economic and business scenario in the state is gloomy; and in the context of the ravages of the flood, woes of the real estate sector, and the worsening economic environment in West Asia, there is no light at the end of the tunnel.
The only way by which the rising deficit can be contained is by reining in the expenditure on salaries and pensions. The right move would have been to make pay revision for government employees once in five years like at the Centre. But the FM has stated that this is not acceptable.
It’s almost certain that the fiscal and revenue deficit targets will be missed, the debt burden will increase and the fiscal crisis will aggravate.
We can hope for the best, but should be prepared for the worst.