Bengaluru: Kerala is aiming to present an early budget and begin its spending from 1 April in the next financial year, probably the first among Indian states to do so as it follows the example set by the Centre.
“We are going to present the budget in January," state finance minister Thomas Isaac said over the phone.
The decision of the Communist Party of India (Marxist)-led Left Democratic Front government is significant because it could cut delays to initiate annual state spending. Normally the bulk of spending tends to take place in the second or third quarter of the financial year, both at the Centre and the states-level, if not spilling over to the next financial year. The Bharatiya Janata Party-led National Democratic Alliance (NDA) at the Centre brought forward the budget day to 1 February this year for the same reason.
“If you present your budget in January, you get your summer three-four months to do the work ahead," Isaac said. “And ...because the monsoon is a period where everything is so slow."
Last Thursday, the Kerala government sanctioned 63% of this year’s annual plans, whereas normally less than 20% of plans are sanctioned in the first quarter of the financial year. It could do so because the government ensured that local bodies such as the municipalities and corporations sanctioned their spending for this year by mid-June, instead of delaying it until the tail-end of the financial year. Both these moves were the first of their kinds in the state and are aimed at streamlining expenditure as the state moves to an early budget next year, according to a top bureaucrat who did not want to be named.
Chief minister Pinarayi Vijayan and minister for local self government department K.T. Jaleel recently wrote on Facebook about the government working on early planning and spending but did not mention the early budget.
Kerala usually allocates a high percentage of the budget for/development spending, but the projects get stuck because of inordinate delays, said K.N. Harilal, economist and Kerala planning board member.
On an average, about 25-30% of the state budget goes to grassroots level development projects that cover everything from welfare programmes to construction of roads to providing drinking water to subsidies for businesses, he said. But over time, the process has been caught up in delays.
“Every year, the plan process was taking seven to eight months. This year, the government has simplified procedures and guidelines and it took only three months. We expect things to move even faster next year," he said.
Srikanth Viswanathan, chief executive of Janaagraha, a Bengaluru-based non-profit public policy think-tank, said Kerala’s reform plans could end up as a huge landmark move.
“In India, some state governments usually approve the budget as late as in June, presented in the third week of March, so two-and-a-half months are lost. If the intent of this plan is to ensure that state spending is approved in advance of 1 April, preferably in advance of when the local bodies present their budget, it’s a huge landmark reform," said Srikanth Viswanathan.
“If Kerala’s municipalities have their budgets and plans for a financial year approved by the state government in advance of the financial year, it’ll be transformative. It will cut down delays significantly, which is a huge problem across the country," he said.