KOCHI: The numbers put forth by finance minister KN Balagopal in the budget reveal the financial challenges faced by the state, indicating only nominal changes that are unlikely to spur substantial transformation.
The budget projected a fiscal deficit of 3.4% for FY25, a slight reduction from current fiscal’s revised estimate of 3.45%, while revenue deficit is anticipated to rise to 2.12% from 2.09% in FY24. The debt-to-GDP ratio is estimated at 34.15%, nominally down from 34.29% in the previous year.
Despite severe fiscal constraints, Balagopal managed to muster additional resource mobilisation of just Rs 1,067 crore.
The state’s own tax revenue is estimated to grow by 10.18% over 2023-24’s revised estimate due to continued momentum in economic activities. The share of central taxes is expected to rise by 12.20% on the back of higher growth in direct tax collection and GST mop-up by the Centre. However, cessation of RD grant will offset the expected rise in central tax receipts.
Prof M Suresh Babu of IIT Madras was critical of the budget’s incremental approach. “The budget seems to be a continuation, lacking any discernible radical changes. I would have welcomed a more transformative approach in line with the rhetoric of a sunrise economy. The state has been maintaining status quo, and with these measures, I don’t believe we can overcome the challenges we face,” he said. Babu suggested the state should have anticipated GST compensation shortfall and engaged in proactive resource mobilisation.
Bureaucrat-turned-entrepreneur C Balagopal, however, sounded positive. “The budgeted revenue deficit and fiscal deficit are not out of range. Revenues and expenditures are also growing, showing reasonable growth.” he said, “Public finances of the state reflect its priorities. In my perspective, it broadly represents a good set of priorities,” he said.