Kerala’s hard-headed Finance Minister K N Balagopal is hopeful of steering the state out of the worst-ever financial crisis in recent times. His tenure witnessed a whopping 78.7% increase in the overall tax revenue of the state. Ahead of the annual state budget, his fourth, Balagopal speaks to M S Vidyanandan on the challenges ahead and way forward for Kerala.
The state is passing through an unprecedented financial crisis. Will it affect development projects and social welfare programmes in the new financial year?
The LDF gives topmost priority to development and social welfare programmes. Kerala’s human development indices are better than many other states having more GSDP and per capita income. We have a better distribution of wealth and development. Our performance in education and health is high. Also, we have good roads, hospitals, schools and other infrastructure. These achievements have to be preserved. Social security is core to our development vision. The budget will make sufficient allocations for development and social welfare projects.
The government has stated that the Plan size for the new year would be the same as the current year. Fund shortage has affected the Plan implementation this year and the progress so far is a little above 50%. How will you manage next year?
The major reason for the present crisis is the flawed policies and unilateral cuts on the state’s share of funds by the Union government. A change in the Centre’s stand is desperately required. Or else, we cannot maintain the pace of our development and social welfare programmes. A commendable increase in our own tax revenue helped us to manage things this year. Our spending until December was about Rs 4,000 crore more than the previous year. Kerala’s loss due to the Centre’s flawed policies is about Rs 50,000. If released, this amount can create an impact of 2-3 lakh crore in our economy.
Do you expect that the Centre will change its stand? Why don’t you put up a joint fight with the participation of other states?
The Supreme Court is considering our case against the Union government. We are already in talks with like-minded states and have invited them for the Delhi protest. The Centre is challenging the principles of federalism and financial freedom of states. We will raise this as a national issue. I’m hopeful that the Centre will be forced to change its stand.
Will there be tax proposals in the wake of the financial crisis?
Our freedom for taxation is limited. Still, there are some less explored areas where there wasn’t any revision for many years. Small revision in these areas would bring some relief to the government. There won’t be major revisions.
Apart from the fund shortage, what are the challenges you wish to address in the budget?
The demographic change. The population of senior citizens is increasing. So is the number of youngsters migrating to foreign countries. Our population growth rate is one of the lowest in the country. The budget will attempt to address the emerging demographic challenge. We can arrest migration to a large extent by generating more jobs, attracting investments, creating infrastructure facilities and ensuring overall economic growth It should be a long-term strategy.