The Hindu Business Line : Kerala Budget misses many vital aspects, say analysts

THE State Budget presented earlier this week is devoid of any attempt to address the challenges faced by the economy while it does not make any effort to realistically approach issues such as resource mobilisation, expenditure control and prudent administration of the State finances.

According to officials and experts, no major taxation efforts are seen in the Budget. In fact, several avenues of generating income were left out presumably foreseeing the elections coming up later this year, they alleged. The indicated income from roll back of stamp duty is only Rs 10 crore while it was considered as a loss of Rs 200 crore when the reduction was allowed, they said.

The Economic Survey clearly shows that growth in the primary and secondary sectors have collapsed in the State. "Whatever growth we see around is on account of the contribution by the services sector, which takes the State economy to the average level of national economic growth."

The declining growth in the agricultural and industrial sectors needed to be viewed seriously especially considering the developing nature of the economy with its large dependence on the farming and manufacturing and low income level of the vast population.

The agriculture sector has witnessed negative growth for the third consecutive year. The reasons contributing to this disastrous situation should have disturbed the UDF and the Finance Minister, they said. Still no adequate consideration is given in the Budget for the agriculture sector.

Reduction of farm subsidies as suggested by World Bank and IMF is going fast ahead at a time when agriculture in any developed country, be it in the US, European Union or Japan is being heavily subsidised by the respective governments. Agriculture needs State support in India also and there are no World Trade Organisation hurdles on that account, said an official of the Association of Planters of Kerala.

There has been a total disregard for the industries — State-level public sector enterprises (SLPSEs), traditional sector and small-scale industries, said a trade union leader. Of late, he said, there has been a ray of hope for the revival of many industrial units. But several units cannot operate and produce goods for want of working capital.

Consequently tax (excise duty and sales tax) receipts to the Government from PSEs have declined limiting resource availability to that extent. Had there been an attempt to provide working capital to these units and allowed them to operate and take orders from the market it would have brought good result, they claimed. "The Budget does not see this point".

The Enterprise Reforms Committee (ERC) has been disbanded following widespread protests but the Ministerial sub committee, which is expected to look into the revival of the SLPSE units, is yet to set its agenda. If the delay continues further, the end will be natural death of many of these units, Mr Jayachandran, General Secretary, Save Autokast Forum pointed out.

Meanwhile, several small-scale industries are in doldrums for want of minimum support from the Government. In fact the Government has not made an attempt to study the matter with a certain concern that it provide employment to several people and strengthen the productive base of the State.

Most of the industrial estates are turned desolate having the units closed down. "Yet, the Government has no programme to consider their request for infrastructural support or speedy dispensation of numerous issues in which the units are entangled", says Dr M.P.S. Nair, past Chairman, Institution of Engineers (India), Cochin.

There are no schemes for firm support to the traditional sectors of coir, handloom, cashew, and fisheries. These sectors have suffered most under the liberalisation policies.

The Government could have extended marketing supports, quality improvement initiatives and devised a social security net for the sector without a major financial outgo.

The success of Kudumbasree, said an official, is the best illustration to this point that apart from financial incentives other support by way of extension services help to empower the community involved to become self reliant.

With State-level VAT coming in to force the States' own capacity for resource mobilisation through taxation is curtailed.

This makes efficient collection of taxes, rationalisation of expenditure, strengthening the productive base of the State and claiming and obtaining reasonable central assistance most important under the present economic environment, said a senior source at the Taxes department.

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