The 2022-23 Kerala budget has proposed additional resources mobilisation of ₹602 crore mainly through a revision of basic land tax (₹80 crore) and a one-time increase of 10 per cent in fair value of land (₹200 crore) and 1 per cent for motor cycles costing ₹2 lakh (₹60 crore).
The basic land tax would be revised by introducing a new slab above 40.47 ares in grama panchayats, municipalities and corporations, the State Finance Minister KN Balagopal said while presenting the Budget in the State Assembly on Friday. The basic land tax rates would be increased in a calibrated manner across all slabs.
‘Green tax’ on old vehicles up
The one-time increase of 10 per cent in fair value will also be implemented across all segments, the Finance Minister said. This apart, the ‘Green tax’ imposed on old vehicles (above 15 years) is being raised by 50 per cent and will be levied on diesel vehicles (except motor cycles) such as 3-wheeler vehicles, private motor vehicles, medium motor vehicles, heavy motor vehicles and other diesel vehicles to net ₹10 crore.
The one-time settlement scheme to pay pending arrears on motor vehicle tax will be continued this year also to bring in ₹2 crore revenue. To fetch ₹50 crore revenue, the compounding scheme to settle pending undervaluation cases is to l be extended to this financial year.
Against a cumulative revenue mobilisation of ₹602 crore, the Finance Minister announced additional expenditure of ₹1,081 crore. But a bulk of the big-ticket spends is being routed through the now-familiar Kerala Infrastructure Investment Fund Board (KIIFB), an off-budget mechanism for raising finances.
Guarantee ceiling revised
Significantly, the Finance Minister announced that the current guarantee ceiling, finalised through an amendment in 2018, will be amended upwards ostensibly to facilitate KIIFB borrowings and repayment.
The present ceiling on government guarantee is 5 per cent of the GSDP. As per the proposed amendment, ‘the total outstanding guarantee as on the first day of April of any year shall be 100 per cent of the total revenue receipts based on the annual financial statement of the state in the preceding year or at 10 per cent of the GSDP, whichever is lower.’
Turning to revenue receipts, the Finance Minister said that the state is likely to have a ₹11,000 crore GST compensation shortfall after June since the Centre is going to dispense with the system. Similarly, the state receives only 1 per cent share pf Centrally Sponsored Schemes.
GST collections up
But, he began the budget by saying that the average GST collections in January and February recorded a growth of 14.5 per cent, indicating economic recovery. However, this does not mean that the crisis has come to an end, given tje chances of outbreak of fourth Covid wave and the Russia-Ukraine war.
The pandemic has resulted in the long-run negative consequences in economy and the Government’s financial capacity. This is known as ‘long economic Covid.’ The Finance Minister proposed a ₹2,000 crore programme to deal with the impact of inflation and to ensure food security.
Sustainable, just development
The state hopes to achieve better growth while ensuring environment conservation, sustainability in development and social justice. This is the objective of ‘Nava Kerala Nirmanam’ (building a modern, resilient state). “The budget is prepared on the basis of this concept, which is also the central theme of its 14th five year plan of Kerala.
With this view, he went on to announce major programme to pitchfork the state to the vanguard of the 5G revolution; modernise the higher education sector; rev up the knowledge economy; create a medical entrepreneurial system; set up district skill parks, a genome data centre and a strategic programme on microbiome, among others.