The Hindu Business Line : Stable farm prices, healthier PSUs milestone targets of Kerala Budget

Budget Highlights•Aviation Turbine Fuel tax reduced to 4 pc•10 pc surcharge on big retail outlets•Compounding tax for gold jewellers simplified•Additional resource mobilisations at Rs 188 crore•Tax concessions at Rs 25 crore•Cumulative deficit at Rs 627.40 crore•Pension for one million workers raised to Rs 200 per month

The Government has accepted the award declared by the Debt Relief Commission, set up for the first time by a State with powers to write off farm loans, for Wayanad district.

Our Bureau

Thiruvananthapuram, March 6 The Kerala Budget for 2008-09 has sought to address a fiscal emergency thrown up by the complex play of rising prices and taxing farm debt burden, not entirely decoupled from the scene obtaining at the national level as depicted in the Union Budget.

The State Budget presented on Thursday by the Finance Minister, Dr Thomas Isaac, also announced a slew of measures aimed at cleaning up the balance sheets of laggard public sector units and utilities to enable them to raise commercial capital and become economically viable.

The Government has accepted the award declared by the Debt Relief Commission, set up for the first time by a State with powers to write off farm loans, for Wayanad district.

Once the details of the larger scheme announced by the Centre are made known, a decision will be taken as to how to go ahead with the debt relief measures in the State. A price stability scheme will be implemented in the State for ensuring the stability of prices of agricultural produce. The balance amount available in the Debt Relief Scheme will be utilised for the purpose. Other funds meant for the procurement of agricultural products will be integrated with this fund.

Farm crisis

The agrarian crisis has impacted the cooperation sector too. This has seriously affected repayments, Dr Isaac noted. Concessions of around Rs 3100 crore has been provided as interest relief, moratorium and through writing off loans of farmers in the cooperative sector.

“Our major opposition to the Vydyanathan Commission report was that it would restrict the scope for intervention of cooperatives in various sectors. This will also seriously affect mobilisation of deposits. We are trying to negotiate a special concession under the cooperative package. A special package will be launched in 2008-09 for promoting paddy cultivation,” the Minister said.

Pension schemes

He announced that he has been able to clear the arrears of pensions. During the last two years, Rs 686 crore has been spent for paying pension to the poor. “We have cleared all arrears now,” he said.

Dr Isaac further declared that the pension of nearly one million workers in the un-organised sectors spanning fisheries, coir, cashew, handloom, reed, artisan, building construction and agricultural workers would be raised to Rs 200 per month.

The outstanding arrears payable by the Cashew Corporation and Capex to banks is a major bottleneck in the operation of these institutions. After discussions with the banks, a scheme for one-time settlement will be chalked out. The repayment burden will be borne by the Government.

The Kudumbashree poverty eradication programme is being geared up to face new challenges in a campaign mode from April onwards.

The amount of loans made available from financial institutions shall be enhanced to Rs 1500 crore by March 2009. A sum of Rs 30 crore has been set apart for Kudumbashree in this year’s budget.

KFC roles

Reverting to public sector units and utilities, the Minister said the Kerala Financial Corporation (KFC) will be enabled to provide financial assistance to small-scale industrial units.

The main hurdle for KFC to mobilise capital is the legacy of the non-performing assets amounting to 55 per cent of the total assets.

This would be brought down to 35 per cent through a one-time settlement. Through increase in share capital, the NPAs will be brought down further to 10 per cent. Once this is achieved, KFC will be in a position to raise resources through bonds and other means for effectively intervening in the small industries sector.

The Transport Department has come up with a package for the renovation and restructuring of the Kerala State Road Transport Corporation. This will be supported by enabling provisions in the Budget, which announced the writing off of tax arrears to the tune of Rs 700 crore. The Finance Minister also announced his intention to forego the interest and penal interest amounting to Rs 153 crore.

The loans extended by the Government will be converted into share capital. Title records will be given to land under KSRTC possession, their value fixed, and added to the asset and liability statement. The KRSRTC will be in a position to raise commercial loans in this manner. Through loans with Government guarantee, 1,000 buses will be commissioned every year.

This will improve the mileage significantly and reduce the annual expenditure by Rs 100 crore. A tripartite MoU has to be signed between the trade unions, the KSRTC management and the Government, which shall contain monitorable targets.

A comprehensive restructuring package will be implemented for the Kerala Water Authority during its silver jubilee year this year. Interest on loans to the tune of Rs 1006 crore will be written off. The loan amount of Rs 839.60 crore as on March 31, 2007, will be converted as an interest free fund. By cleaning up the balance sheets of KWA in this manner, it will acquire the capability to raise loans on a commercial basis.

Other major allocations are Rs 1671 crore as development fund, Rs 398 crore as maintenance grant and Rs 363 crore as general purpose grant for local self government institutions; Rs 307 crore for the Jawaharlal Nehru Urban Renewal Mission Programme being implemented in Thiruvananthapuram and Kochi Corporations; Rs 530 crore against arrear payments of road contractors; Rs 257 crore for irrigation; Rs 133 crore for the health sector under the National Rural Health Mission; Rs 98 crore in total plan outlay for tourism; Rs 78 crore for IT sector; Rs 71 crore for water transport; Rs 60 crore for the Athirappalli hydro-electric project; Rs 31.50 crore for the higher education sector; and Rs 20 crore as share capital for the pit-head thermal coal-based generation station at Bhaitharani West coal block in Orissa.

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