THIRUVANANTHAPURAM: If Kerala is facing financial constraints, none of that was evident when Finance Minister T M Thomas Isaac presented his budget for 2020-21 on Friday, giving a new thrust to social welfare programmes, increasing spending in core sectors and stopping short of exploring new sources for revenue generation other than increasing tax on vehicles and raising fair value of land.
In his penultimate budget, coming ahead of the local body polls later this year and assembly elections next year, the FM expectedly outlined a slew of welfare schemes, including Rs 25 meals at 1,000 Kudumbashree-run restaurants across the state, Rs 8,253-crore drinking water projects, enhancement of welfare pension to Rs 1,200, construction of Rs 12,000 houses for SC community and tax waiver for e-vehicles.
The government, facing constraints to borrow, continued to route its huge infrastructure spending through KIIFB, its off-budget infra-fund raising unit. Isaac said Rs 20,000 crore will be spent via KIIFB in 2020-21. He generously allocated Rs 20,861 crore to education sector, Rs 7,856 crore for public health and Rs 7,500 crore for social welfare schemes.But little was provided for resource mobilisation to execute the grandiose plans.
Though he increased the land fair value by 10%, imposed 1% additional tax on bikes (costing Rs 2 lakh or less) and 2% on cars (costing Rs 15 lakh or less), these measures and some others are expected garner additional revenue of only Rs 1,103 crore.
The budget also estimated the public debt to touch Rs 2,02,713 crore in the coming fiscal while the total outstanding debt is expected to touch Rs 2,92,086 crore -- nearly 30% of the GSDP. While government is planning to borrow another Rs 24,491 crore, including market loans, it will require Rs 19,850 crore to pay interests alone in the next fiscal.
The big fund mobilisation for next financial year comes from lottery sales at Rs 15,000 crore, after the ticket prices were quietly hiked by Rs 10 on Thursday. “The turnover of Kerala State Lottery in 2015-16 was Rs 5,445 crore. This will be raised to Rs 12,000 crore in 2019-20. The target for 2020-21 is Rs 15,000 crore,” Isaac said. Surprisingly, liquor was left untouched in the budget with the FM choosing not to tinker with the tax rates.
Given the financial crisis, Isaac also announced some austerity measures such as no purchase new cars by the government, hiring cars on a monthly basis, restraining TA bills and using electric cars. He said he hoped to “avoid excess expenditure of Rs 1,500 crore through the steps.” The government will also remove ineligible welfare pensioners and duplication, which will help it save Rs 700 crore, he said.
Going a step further, Isaac also announced plans to redeploy the government staff redundant in one department to other sections facing staff shortage.
Isaac’s big miscalculation came via GST, where he initially projected a 24 per cent increase in tax collection. “Considering 2015-16 as the base year and applying 14 per cent growth rate should have yielded a revenue of Rs 28,416 crore. But only Rs 15,030 crores was collected under GST up to December 2019. Though the difference between projected revenue and GST collection has to be compensated, the central government is failing to do so. Our aim is to get out of compensation limit in the financial year 2020-21,” he said.