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The burden of welfare in Kerala budget

The budgets presented annually by the Centre and state governments are not just income and expenditure figures. They constitute a pointer to the policies and efficiency of the government and an indicator of where the administration stands. It should meet the challenges of time and solve problems. By this measure, the third Kerala budget presented by Finance Minister K.N was a complete failure. Moreover, it does not serve the purpose of dealing with the crises and problems that the state is facing today. One of the major challenges facing the finance minister while going about the the budget exercise was formidable price hikes. Criticizing the Centre's economic policies that make people's lives difficult, the budget of the left-wing government presented on Friday comes before the people in the face of rising prices. The state is targeting an additional revenue of Rs 3,000 crore through tax hikes in the next financial year. In the current financial year's budget there were tax proposals only worth Rs 650 crore.i.e. this year's tax increase is five times that amount. The finance minister is showing 'people orientation' by slapping tax increase on petrol, diesel, water, electricity, land registration, vehicle tax and building tax. No government has dared to implement such a huge additional tax mobilisation in recent times. The reason for the finance minister's courage is probably that this budget comes with no immediate election at hand.

The additional cess imposed on fuel under the guise of social security will push Kerala, a consumer state, into severe price hikes. This will further distress the common man who is already suffering due to inflation. The adventure of price hike will hurt most the very segment whom the finance minister claims to help. In fact the minister is using social security as a cover for the tax hike, but at the same time, the social security pensions have not been increased even by a single rupee. In effect the minister is tactfully placing the burden of social security pensions entirely on the shoulders of the public as yet another additional burden. Balagopal started the budget speech by announcing that the vision of the budget is to take Kerala forward by improving the standard of living of the people and thereby to create a new Kerala. However, Budget has totally failed to do justice to such a vision. Apart from the usual way of announcing several projects and allocating some token amount for them, the budget does not provide a roadmap for the implementation of these projects. 'Make in Kerala' and 'Vizhinjam Scheme' are the means that the Finance Minister has identified to accelerate industrial investment. However, it is doubtful whether any study has been done on this before announcing it in the budget. The core of the 'Make in Kerala' concept is that products worth Rs 1,28,000 crore that Kerala buys from abroad every year can be produced here. Although this is an idea that has been heard many times earlier, there are no concrete suggestions to implement it.

Estimates suggest that the annual birth rate in Kerala will drop to 3.6 lakh by 2031. This implies that more than the number of projects, what matters is their effective implementation. The budget also errs in gauging the importance of the projects and formulating guidelines for their effective implementation. It is true that the central government's continued neglect of Kerala and rigidity in the state's ability in taking loans is partly responsible for the state's crises. But it is doubtful whether the Finance Minister has succeeded in the financial management as demanded by the given situation. . The state's estimate is that resource mobilization to the tune of Rs 11,000 crore has stalled due to Centre's curtailing of grants and curbs on borrowing. But when we look at the income and expenditure figures, some bleak facts emerge. Despite this being a budget presented amid the allegations that the state is slipping into a debt trap, the Finance Minister has not given sufficient thought to the emerging financial crisis. According to the revised estimates for the current financial year, the revenue of the state is 1,29,268.15 crore and the expenditure is 149183.68 crore - meaning a deficit of Rs Rs 19,915.53 crore. According to the budget presented on Friday, the revenue is Rs 135,418.67 crore and the expenditure Rs 159,360.91 crore meaning a gap of Rs 23,942.24 crore. This represents a spurt in deficit by Rs 4026.71 crore in a single year. A huge increase of this magnitude is unbearable for a state that cannot even afford an additional tax proposal of Rs 3,000 crore.

Meanwhile, only Rs 14539.23 crore has been earmarked for capital expenditure out of the expected budget of Rs 1,59,360 crore. This means not even 10 percent of the expenditure is for project costs; as per the revised estimate for the current financial year, the capex is 14,833.34 crores. The new budget falls short of even that. Public debt also increased from 25,716 crore to 28, 552 crore registering an increase of 2,836 crore. In 2020-21, the state spent Rs 46,754 crore on salary and pension. However, in 2021-22 it increased sharply to 71,393 crore, an increase by 24,639 crore. Kerala's economy cannot afford this rate of increase. The finance minister has not addressed this issue in the budget either. Thus, the budget, which turns out to be a hidden blow to the people, finally turns out to be a pack of numbers, doubts and apprehensions.

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TAGS:Kerala Budget 2023-24 KN Balagopal increasing deficit capex below 10 % 3000 Cr additional tax burden 
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