THIRUVANANTHAPURAM: Undoubtedly, the acute fiscal constraints in store for 2023-2024 have prompted finance minister KN Balagopal to go for additional resource mobilisation to the tune of around Rs 3000 crore. He took the extreme step to impose a fuel cess after the Centre conveyed its decision to cut Rs 2,700 from the state’s borrowing limit. Sources said the minister kept the chief minister and party in the loop before taking the final call on the hike that could politically backfire.
In his budget speech, Balagopal pointed out that the state anticipates a shortage of Rs 8400 crore in Revenue Deficit Grant compared to 2022-23, a loss of around Rs 5700 crore due to cessation of GST compensation, resource loss of around Rs 5000 crore due to restriction on borrowing limit, as well as the reduction on account of the debt likely to be borne by KIIFB and the Social Security Pension Company.
Many feel that Balagopal was taking a political call by introducing these measures this year. With elections coming up in 2024, it would be difficult to go for taxing measures next year. Financial experts however aired concerns on how realistic these proposals would be.
Even when they believe that resource mobilisation is unavoidable, such steps would have proved more convincing, had these been clubbed with austerity measures on the part of the government.Many have pointed out the contradiction in opting for Rs 2000 crore measures to tackle inflation while levying a fuel cess that in turn could lead to a price hike. It’s a fact that inflation affects the poor badly. But they will be covered under social security support, pointed out KJ Joseph, Director, Gulati Institute of Finance and Taxation.
“There’s a price rise in general. However many of those who cannot afford are protected. Still, there could be segments that are not protected. In a society like Kerala, such social equalization processes would prove useful. This can also be an instrument to promote EV transmission,” he said. He added that these measures could have been less painful, had they been coupled with socially-appealing economic measures which would have been appreciated.