Amid the pandemic-induced slowdown, Finance Minister KN Balagopal on Friday presented the Kerala state budget for 2022-23 seeking to provide relief to people from rising prices even while putting his bets on the knowledge-driven sectors such as IT, technology, and communications to generate jobs and pull the economy out of the woods.
The budget generally refrained from announcing major tax proposals. A one-time 10% increase in fair value of land and a 1% hike in tax for motorcycles costing up to Rs 2 lakh are the two notable exceptions. He expects an additional revenue of Rs 80 crore from land tax with the introduction of a new slab for above one acre. This will lead to an increase in the basic land tax in a calibrated manner. Balagopal aims to raise only a modest Rs 602 crore additional revenue from taxes in the next fiscal year.
The finance minister set aside Rs 2,000 crore for checking price rise and ensuring food security. He said 20 lakh employment opportunities will be created under the knowledge economy sector. Balagopal also announced setting up four IT corridors parallel to the NH66 for decentralising the state’s IT sector. The budget also allocated Rs 2,000 crore for land acquisition for the SilverLine rail project, a clear message that there’s no going back on the showpiece-but-controversial project.
The finance minister chose not to increase the welfare pension which experts reckoned would have provided much-needed money in the hands of the people and boosted the economy due to higher spending. There was also no mention of any austerity measures given the precarious financial situation of the state treasury. “The Government of Kerala has not adopted an evasive policy of curtailing expenditure in times of crisis. We have adopted a policy of more proactive intervention to resolve issues,” Balagopal said, in a budget speech that lasted two hours and fifteen minutes.
Public finance expert Jose Sebastian said the FM missed the trick by not raising the welfare pensions. “In a consumption-driven economy like that of Kerala, the only option to raise spending is to put more money into the pockets of ordinary people,” he said. The welfare pension in the state is just Rs 1,600. “An increase in welfare pensions would have triggered the revival of the now near-stagnant economy,” he said.
Experts also criticised the government for not going for more revenue mobilisation measures. “A small hike in electricity duty would have fetched the government about Rs 2,000 crore,” said D Narayana, former director of Gulati Institute of Finance and Taxation.
Govt after bird in bush, ignoring the one in hand
The 10% duty on electricity charges collected by KSEB from consumers now is the lowest in the country. The government rightly continued its thrust on health by hiking the allocation to the medical and public health sector to Rs 2,629.33 crore, an increase of Rs 288 crore from this fiscal. Higher education, considered a weakling in the state’s education sector, also received a slew of announcements including Rs 140 crore for skill development.
“The government aims at radical changes in Higher Education Sector. The results of research in higher education institutions should be beneficially utilised for the productive sector of the state,” Balagopal said. To discourage the use of diesel vehicles more than 15 years old, the FM also increased the green tax by 50% on all vehicles except motorcycles.
Though some initiatives were announced for the tourism sector including a Rs 1,000-crore loan for the rejuvenation and development, industry veteran Jose Domnic said the government is running after the “bird in the bush (IT sector) ignoring the bird in the hand (tourism). What we need now is God’s Own Country 2.0 campaign. That’s missing in the budget,” he said.
Boost to industry
As the state government tries to lure more investors into the state
2 hr, 15 min was the duration of the finance minister’s budget speech in assembly
Rs 12,903 cr including the grant sanctioned by the 15th Finance Commission is allocated to local bodies
Rs 1,226.66 cr is the provision this year for industry sector. Rs 200 crore has been allotted for industrial facilitation parks. A sum of C5 crore has been provided to develop 25 industrial parks
A 79km outer ring road to be constr-ucted in the state capital, from Nava-ikulam to Vizhinjam Bypass
The green tax imposed on the old vehicles (over 15 years) has been increased by 50%
PAPERLESS BUDGET
The first complete budget of Pinarayi 2.0 government found a place in the history of the state assembly as the first-ever paperless budget, with K N Balagopal reading it out it from an iPad
One-time 10%
increase will be implemented in fair value of land. It is expected to fetch the government an additional Rs 200 crore