Finance Minister Balagopal pegged the revenue deficit at ₹27,846 crore, 2.12 percent of the state's GDP, and the fiscal deficit at ₹44,529 crore, 3.4 percent of the GDP.
Kerala Finance Minister KN Balagopal. (Supplied)
Kerala’s Budget for 2024-25, presented in the State Assembly on Monday, 5 February, has left many disappointed.
Finance Minister KN Balagopal’s fourth Budget speech lasted for around two-and-a-half hours but lacked any major proposals. However, he was liberal in criticising the Union government for neglecting the needs of the state.
He referred to the alleged denial of the state’s legitimate share of plan fund allocation, centrally collected taxes, and central government-sponsored projects.
The finance minister said: “The Centre provides only ₹ 21 against Kerala’s tax collection of every ₹ 79. That is, only ₹ 21 out of ₹ 100 is the Centre’s contribution. Uttar Pradesh gets ₹ 46 out of ₹ 100 from the Centre.”
Balagopal said Kerala would have to consider “Plan B” if the Centre’s neglect towards the state continued. However, he did not specifically detail the plan.
The minister said the Budget has thrown open the gates for private investment to salvage Kerala from a severe financial crisis. He said he was expecting a revenue of ₹1,38,655 crore and an expenditure of ₹1,84,327 crore in the next financial year.
Balagopal pegged the revenue deficit at ₹27,846 crore, 2.12 percent of the state’s GDP, and the fiscal deficit at ₹44,529 crore, 3.4 percent.
“Futuristic technological strides, an exponential rise in demand, and the resultant economic development define the sunrise sectors. This is unlike the sunset sectors, which have weakening demand and are driven by technologies destined for obsolescence,” Balagopal said in his opening statement.
Rubber farmers, expecting a decent Minimum Support Price (MSP), were left disappointed and fuming after the finance minister announced a hike of ₹10 to ₹180 from ₹170 for a kilogram of rubber.
The farmers were expecting that the MSP would cross the ₹ 200 mark, especially since the Budget was presented in an election year.
The election manifesto of the ruling LDF had promised an MSP of ₹250, while the opposition UDF had been demanding ₹300 as support price per kg.
However, Balagopal held Kerala’s economic constraints responsible for the nominal hike in the MSP included under the Rubber Production Incentive Scheme.
Unrestricted import of natural rubber from outside has ruined India’s rubber sector. Thalassery Bishop Joseph Pamplani had in March last said that the Church would help the BJP get a Lok Sabha MP from the state if the central government increased the MSP to ₹300.
With the Centre’s vote on account and the state Budget disappointing the rubber farmers, there could be possible political realignments in the central Kerala region.
Balagopal said one instalment of the pending Dearness Allowance of government employees would be disbursed in April. Six instalments have been pending due to the state’s financial crisis. onThe finance minister, however, did not mention the pending arrears.
The Budget proposed ₹3 lakh crore worth of industrial investments in the state in the next three years. Balagopal spent a significant portion of his speech on the Vizhinjam International Seaport, which the Adani Group was developing.
He said the first phase of the under-construction seaport would be functional by May this year, resulting in a heavy flow of infrastructure-related investments to southern Kerala, besides boosting imports and exports.
The minister’s claim sounded strange because of the slow progress of construction works at Vizhinjam for various reasons, including the lack of funds and the failure of the implementation partner, Adani, to meet its promises on time.
The local fishing community, too, has been unhappy as the government-sponsored expert committee studying the project’s environmental impact has been prolonging the given assignment.
Though the Budget did not promise any major relief to the people in the face of price hikes and climate change-induced agricultural decline, Balagopal categorically stated that the government would go ahead with the K-Rail Project connecting Thiruvananthapuram with Kasaragod and reducing train travel from seven hours to three hours.
The project — prestigious to the LDF government — was shelved months ago in the face of stringent opposition due to its heavy infrastructural and environmental costs.
Balagopal also said light metro projects would be implemented in the state capital, Thiruvananthapuram, and the northern city of Kozhikode.
Stating the interim Union Budget presented on 1 February neglected Kerala, he said railway passengers in the state were made to suffer.
Balagopal said even the railway freight services were in a crisis due to poor infrastructure allocation.
However, the minister backtracked on the promise in the LDF manifesto that welfare pensions in the state would be increased from the existing ₹1,600 per month. The Budget also failed to mention any time-bound plan to clear the welfare pension arrears.
Balagopal proposed a nominal increase in the price of Indian-Made Foreign Liquor (IMFL), imposing an additional ₹10 tax on each bottle. He claimed that it would generate an additional ₹200 crore in revenue.
He also significantly increased the court fee and electricity duty for those generating electricity.
“The Budget proposes an enhancement of 15 paise per unit in the electricity duty for consumers who generate and consume energy for their consumption, eying an additional revenue of ₹24 crore,” Balagopal said.
“The duty for the sale of electricity had been levied at six paise per unit for years. This is enhanced to 10 paise per unit. An additional revenue of ₹101.41 crore is expected,” he stated.
Balagopal said suitable amendments would be made to the Kerala Court Fees and Suits Valuation Act, 1959, to find ways to mobilise more revenue. “Through these amendments, the government expects a revenue of ₹50 crore,” he said.
The Budget has earmarked ₹1,698.30 crore for the struggling agriculture sector, set aside ₹50 crore for extreme poverty eradication, and announced ₹134.42 crore for the cooperative sector.
Balagopal said investments worth ₹5,000 crore would be attracted to the tourism sector. Private players, too, would be encouraged in the sector.
Announcing more support to the higher education sector, the minister earmarked ₹250 crore for a Digital University.
The Congress-led Opposition UDF launched scathing criticism, questioning the credibility of the state Budget. They termed it a politically motivated document.
Addressing the media after the Budget presentation, Leader of the Opposition VD Satheesan said the finance minister ruined the sanctity of the Budget document by flooding it with political announcements and criticism of the Opposition.
“Is the Budget a document to criticise the Opposition,” he asked. Satheesan questioned the Budget’s credibility, citing the discrepancies between the plan expenditures announced in the previous Budget and actual spending.
“Only 55.42 percent of the expenditure announced last year has been spent so far with only one-and-a-half months remaining in the current fiscal,” he said.
“Only 38 percent of the allocation has been spent in the agriculture sector. For rural development, it’s 54 percent. In the cooperative sector, only 8.84 percent was spent, industries 33 percent, scientific services 29 percent, and social services 54 percent,” he said.
He said the finance minister used cliched communist jargon to cover up the actual situation of the state’s economy. He said the government ignored the agriculture sector.
The Opposition leader added that the government ridiculed the rubber farmers by announcing a meagre ₹10 hike in MSP.
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