FM Isaac slams centre for not allowing a hike in its debt-ceiling bar to pool income from borrowings
Kerala is mostly dependent on goods from other states, and lack of an effective e-way bill system means tax loss, says Isaac
Bengaluru: Kerala’s communist government introduced fresh cesses to increase revenue and expanded its welfare spending while presenting its budget on Thursday. In an effort to go green, the budget also said the state will make capital Thiruvananthapuram the first city in India to have an all-electric public transport system.
Finance minister Thomas Isaac’s introduction of fresh cesses is rare after the rollout of the goods and services tax (GST) took away most of the taxation powers from states. Against the backdrop of last year’s floods, the state was granted special permission by the GST Council to impose 1% cess for the next two years. Isaac criticised the Centre for not providing enough funds to tide over the crisis and for not allowing the state to raise its debt-ceiling bar to pool income from borrowings.
Of a total outlay of ₹1.42 lakh crore in the budget, the plan outlay was raised to ₹39,807 crore from ₹32,564 crore.
Isaac, a development economist turned politician, said it would be “suicidal to consider austerity", for several reasons, including a reversal in the trend of remittances from the Gulf that prop up one-third of the state economy. He said the state's the fiscal deficit and revenue deficit would be reduced by 1% and 3.3%, respectively.
GST revenue is expected to increase by 30% in the next fiscal, said Isaac, with a set of reforms to prevent leakages in inter-state billing, which includes placing automated number-plate checking cameras to monitor the borders.
Isaac said the new cess will be imposed on products above the 12% GST bracket. Beer and wine will face an additional cess of 2%, while gold and silver face an extra cess of 0.25%. Movie tickets, electronic goods, television sets and other semi-luxury and luxury products will become costlier with the new cess.
On reconstruction after the floods, the budget announced ₹1,000 crore for 25 projects under the Rebuilding Kerala Initiative, a freshly floated nodal agency, apart from a significant boost of ₹250 crore in outlay for all flood-affected panchayats (local bodies). It has also earmarked ₹4,700 crore under various projects to improve livelihoods of flood-affected families.
Farmers who suffered in the floods will receive ₹2,500 crore earmarked for agriculture, apart from a ₹1,000 crore special package for the most vulnerable Kuttanad region. Fishermen, who saved thousands of lives during the floods, were also in focus. Isaac said ₹1,000 crore would be spent on bettering the lives of fishermen where a cyclone wreaked havoc in 2017, apart from other schemes.
Isaac also expanded the state’s welfare net. Pensions for older people, who form about 13% of the population, were raised by ₹100 from about ₹4,000 per month. The state government also unveiled the Karunya Samagra Aarogya Insurance Scheme, a comprehensive health insurance plan that will make medical insurance either free or heavily subsided for almost all families in Kerala. The scheme is to be funded by the state government’s ₹11,000 crore revenue from lotteries.
The Sabarimala controversy featured prominently in the budget. Isaac announced a ₹739 crore package for the Sabarimala shrine, which includes plans to improve temple roads, renovate the temple’s base camps and an unprecedented giveaway of ₹100 crore to the temple’s management body, the Travancore Devaswom Board.
The budget also announced an unprecedented ₹1,420 crore for women empowerment and ₹3,500 crore loans for Kudumbashree, Kerala’s million-strong women’s self-help group.
Costing ₹20,000 crore, the massive public infrastructure expansion will begin this year under an escrow mechanism called Kerala Infrastructure Investment Fund Board, said Isaac. A high-speed railway track connecting the state from north to south will also become operational this year, he said. Kerala Bank, an amalgamation of all cooperative banks that will become the largest bank in the state, will start functioning this year, he said.
The house erupted in applause as Isaac said that in the last two years, nearly 2 lakh students left private schools and joined government schools last year, after the public schools were given a face-lift. "What more can a government ask for," he said, in Malayalam.