KOCHI: Finance Minister K N Balagopal has a tough task ahead of him when he rises to present his second full budget on Friday, but perhaps the biggest challenge is to improve revenue mobilisation, stop tax evasion and tap new sources for non-tax revenue.
Experts reckon that the budget will show robust growth in the tax and other revenue mobilisation on the back of a 12.01% spike in GSDP in 2021-22, against a 8.43% drop the previous year when the pandemic hurt the economy.
Prof K P Kannan, former director and fellow of the Thiruvananthapuram-based Centre for Development Studies (CDS), said there was considerable scope for higher mop-up via non-tax revenues. “Kerala has one of the lowest non-tax revenues as a percentage of state income,” he pointed out, adding that he expects higher revenues and tax collections.
According to Prof Mary George, former chairperson of the Kerala Public Expenditure Review Committee, the tax-to-GSDP ratio in Kerala was below 10% whereas it is between 30-45% in developed economies.
“The finance minister must improve efficiency in tax collection and stop evasion,” she said, adding less than 15% of the state’s over 20 lakh shops and traders are registered with the Kerala government. “The Vigilance and Anti-Corruption wing of the government should conduct surprise checks on shops and fine them heavily,” she said.
Prof Kannan said the budget should announce steps to phase out off-budget borrowings to restore the sanctity of the government budgetary system. Further, the FM should initiate measures to address the issue of unemployment among the educated, especially young women.
Economist B A Prakash said Kerala is in an unprecedented fiscal crisis due to various reasons, including unsound fiscal policies, poor fiscal management, revision of salary and pension once every five years and the fiscal extravagant nature of spending in many areas.