With both eyes clearly on the upcoming assembly election, Finance Minister T M Thomas Isaac on Friday unveiled goodies for almost all segments – from farmers to the unemployed, NRIs to government employees, and pensioners to the poor – in the final and sixth budget of the Left Front government. In the last ball of his innings, Isaac has indeed hit a six, but it remains to be seen if this is enough to help his party win the match.
While Isaac gave his best, the generous doles have left financial experts wondering from where the money for the ambitious welfare programmes would come.
Isaac also chose to focus on the development of digital economy and knowledge society to address the joblessness in the state, which has the highest educated unemployment rate in the country. Setting aside Rs 200 crore for the newly-created K-DISC (Kerala Development Innovation Strategy Council) as a ‘knowledge economy fund’, he promised to create 20 lakh new jobs in the next five years. Another eight lakh jobs will be created in new development projects in 2021-22.
The finance minister, who has now presented a total of 12 budgets, did not try to cover up the political intention behind his large-heartedness. “The LDF is coming back to power. The budget is aimed for our reelection,” Isaac later told reporters.
In a record-breaking speech that lasted 3 hours and 18 minutes, Isaac proposed a hike in the support price for Kerala’s key agriculture crops like rubber, coconut and paddy, in a move seen as a message to the Centre, which is grappling with farmers’ protest in Delhi.
“The central government’s arrogant attitude of doing whatever they wish based on their majority in Parliament will have to bow down before the farmers,” he said, referring to the controversial farm law reforms. He then announced an increase in support price for rubber from Rs 150 to Rs 170 a kg, paddy from Rs 26.30 to Rs 27 per kg and coconut from Rs 27 to Rs 32 per kg.
While distribution of food kits, a key factor that helped the Left in the recent local body polls, will continue till April, the budget also proposed to provide laptops at subsidised rates for poor students. In what could revive sentiments in infrastructure and industry sectors, the minister announced plans to set up three industrial corridors at an investment of Rs 50,000 crore.
While the welfare pension has been hiked by Rs 100 to Rs 1,600, which is expected to benefit 59.5 lakh people, the welfare contribution of NRI returnees was raised by Rs 200. The honorarium for ASHA workers and elected local body representatives has been increased by Rs 1,000. Delivering good news for the nearly 5 lakh government employees, Isaac said the recommendations of the pay revision commission will come into effect from April.
While Isaac’s budget literally extended the gifting season in Kerala, experts warned about the financial fallout of a populist election-oriented budget.
“If you notice, not a single measure was announced to raise resources,” said Jose Sebastian, economist and former faculty at the Gulati Institute of Finance and Taxation. “The salary and pension hike itself will cost the exchequer another Rs 10,000 crore,” he said.
There was a sharp decline in income for the government, which Isaac attributed to the pandemic-related economic slump even as the fiscal deficit shot up to 4.25% from 2.19% in 2019-20. Acknowledging the shaky financial situation, the minister explained: “There is a fall of 18.77% in revenue income in comparison to budget estimates. There was only a marginal dip of 9.64% in revenue expenditure.
Despite poor finances, govt staff set for pay raise come April
The government employees’ pay revision report will be submitted by the end of this month. On the basis of the Pay Revision Commission’s recommendation, order will be issued for revising salaries and pensions from the month of April. Arrears will be given later in three instalments.
Isaac sets record
Thomas Isaac broke his predecessor K M Mani’s record by delivering the longest budget speech. Isaac took 3 hrs, 18 min and wound up his speech only after the Speaker requested him to complete the address before 12.30pm. Mani’s 2013 speech had lasted 2 hrs, 58 min.