Kerala government sitting on revenue mobilisation plans about budget

KOCHI:  As Finance Minister K N Balagopal prepares to present his second full budget next month, a high-level committee he promised to appoint in the last budget to address the anomalies in the fair value of land is yet to see the light of day.

The plan was to finalise a higher fair value for land, which will get a boost from infrastructure projects undertaken by the government, such as the metro rail network in Kochi. However, despite the ongoing financial crunch, the state government is sitting on the proposal that would have yielded a huge revenue inflow for the exchequer. 

“The fair value of land is not in tune with the current market values in many areas of our state. The government has undertaken massive infrastructure projects like national highway expansion, metro rail project, core road network extension, etc … as a result of which the market values of land have increased manifold in the neighbouring areas. To address the issues of anomalies in the fair value, the government will constitute a high-level committee to look into this issue and ensure that fair values reflect the actual ground realities,” the minister had said in his 2022-23 budget speech.

In economic parlance, this is referred to as a special assessment, which means levies charged against parcels of real estate that have been identified as having a direct and unique ‘benefit’ from the public projects.

Balagopal did not respond to calls or text messages seeking his comment. Mary George, the former chairperson of the Kerala Public Expenditure Committee, said this and many other avenues are not being tapped by the state government for revenue mobilisation. 

In addition to the ‘special assessment’ on real estate, she said the state government is also sitting on recommendations of two subject committees of the state assembly which proposed a hike in the lease rate on land given to big plantation companies and public sector undertakings. The panels proposed a hike from Rs 1,300/hectare to Rs 10,000/hectare, Mary said, adding this was made several years back. 

According to her, the government could also go after tax revenues that are owed to the exchequer, which could yield yet another bonanza. At the end of 2020-21, a total of Rs 22,188.47 crore was not realised under the head of principal taxes. Of this, Rs 15,122.77 crore is not under any dispute, the budget documents showed. “So, what’s stopping the government from collecting at least this amount,” Mary asks.