Despite high hopes, Kerala received practically nothing from the Budget Union Finance Minister Nirmala Sitharaman presented in Parliament on Wednesday, February 1.
The Budget ignored the state government’s request for approval for its dream SilverLine semi-high-speed rail project and an All India Institute of Medical Science (AIIMS) in Kozhikode.
The state had also sought an increase in its GST share to 60 percent from 50 percent. The request, too, was ignored. The demand to extend the GST compensation period to five more years was not considered.
Kerala, which is facing severe financial difficulties, will have to adjust with centrally-sponsored schemes, besides seeking permission to raise interest-free loans.
“As far as Kerala is concerned, the Union Budget is a damp squib. Poll-bound Karnataka received a drinking water project worth ₹5,300 crore, while not even the basic demands of Kerala were considered,” Thiruvananthapuram-based economist Dr Mary George said.
“The Budget has no Kerala-specific announcement. A step-motherly attitude is visible,” she added.
Earlier, Kerala gave Sitharaman in writing its preference for commencing the Silverline project and sought budgetary allocation for AIIMS, which has been pending for a long period.
The state government had acquired 150 acres for the institute in Kozhikode years ago as instructed by the Union government.
Kerala wanted a special package for Keralites returning from other states and abroad after losing their jobs and income in the post-pandemic scenario. It also wanted to increase the number of work days under the National Rural Employment Guarantee Programme.
The state had sought a special package for over three lakh women working in the cashew processing sector in dismal conditions.
The Union minister also ignored Kerala’s demand for increasing central allocations for the state’s various welfare pensions. The state wanted the money borrowed by the Kerala Infrastructure Fund Board (KIIFB) excluded from the ceiling for availing loans set by the Union ministry. It, too, was not considered.
Kerala’s demand for permission to borrow additional funds, which could be up to four percent of the total domestic production, was also ignored.
Centre ignored Kerala, says minister
Talking to media persons in Thiruvananthapuram, Kerala’s Finance Minister KN Balagopal criticised the Budget, saying that the long-pending demands of the southern state were completely ignored and that the proposals were not beneficial for people at the grassroots level.
The minister pointed out that allocations in significant schemes, including the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) scheme, food subsidies and procuring rice and wheat, were cut drastically.
He said the announcement that the centrally-sponsored schemes (CSS), which is “input basis” at present, would be made “result basis” and pose a threat to states like Kerala.
“It sounds good when you hear this for the first time. But the thing is, who is assessing this result? There lies the danger,” the minister said.
He also wondered whether a new scheme mentioned in the Budget regarding the cooperative sector would be an attempt by the Centre to infringe on the area of cooperative societies, which is a state subject.
Congress leader and former home minister Ramesh Chennithala also termed the Budget disappointing. He accused the BJP-RSS government at the Centre of discriminating against the genuine concerns of Kerala.
He also accused the state government of failing to present its demands before the Centre effectively.
Meanwhile, the Budget evoked mixed reactions from different segments of stakeholders in Kerala. While players in the travel and tourism sector welcomed the Budget, small- and medium-scale traders felt it ignored their concerns.
Tourism sector upbeat
Hailing some of the proposals aiming to boost the tourism industry, Confederation of Kerala Tourism Industry president EM Najeeb said the Budget would do many positive things in the coming years.
“Overall, the Budget is perfect, and on behalf of the tourism industry, I’d like to welcome this Budget,” he said.
Referring to Sitaraman mentioning the tourism sector at the beginning of her speech, he said it was for the first time that the vertical has been given such importance.
“Tourism has been mentioned at the beginning of the Budget (speech) itself as one of the pillars for the growth engine for employment generation as well as an increase in tourism activities in both domestic and international sectors,” said Najeeb, who is also the senior vice-president of Indian Association of Tour Operators.
Sharing similar views, Jose Pradeep, secretary of Kerala Travel Mart Society, said the Budget held immense promise for the growth of the tourism sector.
On mission mode
The government has decided to take tourism promotion on a mission mode with the active participation of the state, and the convergence of government programmes and the public-private partnerships would help tap the sector’s potential, he said.
“Investment of ₹2.4 lakh crore in railways, along with the development of 50 additional airports throughout the country, will greatly improve connectivity, making it easier for tourists to explore our country,” he said.
In addition, 50 tourism destinations would be selected through a challenge mode and developed as a comprehensive package for domestic and international tourism; he added that this would help promote destinations as world-class tourist attractions and draw more visitors.
Pradeep said the changes made in the personal income tax would benefit tourism.
“Exemption limit in income tax has been increased from ₹5 lakh to ₹7 lakh which will lead to a rise in money flow in the market. This increase in disposable income will directly benefit tourism,” he explained.
Adeeb Ahamed, managing director of LuLu Financial Holdings, termed the Budget balanced, with equal focus on traditional and emerging sectors, agreeing that “the way forward is to build a technology and knowledge-based economy.
Turning to financial inclusion, Ahamed said the move to ramp up the credit guarantee scheme for MSMEs would give a fillip to enabling faster access to financial services.
He added that the decision to expand the scope of services in DigiLocker to include MSMEs and make PAN a common identifier would boost user documentation, supporting the onboarding efforts of NBFCs and fintech driving financial inclusion among such companies.
Ahamed felt the proposal to adopt an integrated and innovative approach to develop destinations augurs well.
Traders’ body flays Budget
But, the Confederation of All India Traders criticised the Budget by saying it ignored the small- and medium-scale traders.
P Venkataraman Iyer, State president of the Confederation, said it was condemnable that there was no mention of any welfare scheme for over eight crores of small- and medium-scale traders and no announcement of any change in the existing GST rules.
He flayed the Budget for lacking any reference to the amnesty scheme in taxation.
(With inputs from PTI)