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A budget coming to terms with crisis

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A budget coming to terms with crisis
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The severe constraints created by the inherent deficiencies of the ‘Kerala model’, the Centre’s economic escapades and the rapidly changing Gulf scenario lie on one side. And on the other, lies the political pressures to portray a safe and sound economic picture.

This backdrop of the budget is surely capable of testing Thomas Isaac’s deftness. Similar to last time, he did not show any reluctance to dream this time either. Considering the limitations, one has to only see how much of those dreams would be realized. Kerala used to proudly flaunt the growth rate of the Gross Domestic Product (GDP) in the past years. However, it has come down even below the national average. The growth rate has been dwindling since 2012-13. The tax revenue has also been decreasing. The inward remittance of foreign exchange came down drastically. It is likely to decrease further. The Pinarayi Vijayan government that assumed power inheriting the liabilities of the erstwhile government, had to suffer two major jolts to the economy. The jolt from demonetisation upset the calculations of not only the people but also of the government. Though Thomas Isaac had earlier said that the Goods and Services Tax (GST) which was implemented without any prior preparation would benefit Kerala, even he was compelled to say that the confidence displayed was out of place. Mobilization of funds is becoming a huge obstacle.

What was expected from the budget was a strategy to overcome the crisis. Not much about it was present in the budget. What it included were the several usual promises that could be carried out if there are funds. Thomas Isaac’s budget promises several glad tidings such as social security schemes, women safety projects and also for weaker sections. While Rs 20 crore is allocated for ‘Hunger-free Project’, Rs 50 crore assistance will be provided for endosulfan victims. Kerala State Road Transport Corporation will be immediately revived and steps will be taken to make it profitable. Health Insurance scheme will cover the migrant workers. The other announcements include allocating Rs 289 crore for the differently abled, Rs 50 crore for the development of coconut sector in the state, MSP for rubber, financial aid for the NRK returnees to start businesses, Rs 150 crore for handloom, Rs 40 crore assistance for special schools and reviving Kudumbashree. Most of the announcements sounds fine. And they have been presented peppered with literature. All that could be said about the promises made is that if they are implemented, it will all be fine. This is because increase in revenue and cutting down expenditure mostly depends on the programs that are likely to be or not to be implemented. An increase in revenue is expected also through restoring land tax and increasing the fee for government services.

It can be seen that the extra expenditure of the budget is Rs 915 crore and additional revenue generation is to the tune of Rs 970 crore. The goal of revenue generation would not be realised if the past experience is repeated. There are certain suggestions in the budget for cutting down expenditure which if placed against the gravity of the crisis currently faced by the state, are inadequate, for instance, discouraging the purchase of luxury cars costing over Rs 14 lakh as part of cutting down the expenses. How will this ‘discouraging’ help other than vying to spend an amount of Rs 14 lakh? A tad more of will and sincerity will be required if the budget is not to remain a mere wish-list. The Minister had talked quoting poetess Balamani Amma about a new world in imagination. This is not sufficient to bring it down from the firmament of imagination to hard earth. A budget is not a mere estimate of revenue and expenditure. It is a practical document of policies which acts as the catalyst for social change. Therefore, specific statistics and rational suggestions form the core of the budget. Unfortunately, budgets have turned into mere campaigns, be it the in states or at the Centre.

How much of those are being implemented remains a big question? Several schemes announced by the Finance Minister last year are still on paper. For example, the schemes to achieve self-reliance in protection of water resources and vegetable farming. Most of the revenue expected through ‘KIIFB’ and GST failed to materialise. When the gap between budget and reality decreases, the problem seems to be at the root level. We have not been able to form a sustainable economic model, so far foreseeing the depletion of Gulf revenue. Today, several of our sources of wealth are not productive or viable. No economy will be able to survive depending significantly on factors such as lottery and sale of liquor. Beyond the annual budgets, the crisis in Kerala shows that it is high time to contemplate about the policy programs for the future. The budget that falls short of substance underlines those many drawbacks.

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