Kerala Finance Minister KN Balagopal hopes that the Union Budget 2022-23 would provide for special assistance for adequately supporting ‘counter cyclical measures’ undertaken by the State governments in their endeavour to stimulate economic recovery.

In a pandemic situation, State governments need to adopt such measures to put the economy on a recovery path. Kerala has already expanded the social safety net through higher allocations for a variety of welfare payments, Balagopal said.

These include social security pensions, welfare board pensions, ex gratia payments to vulnerable sections, higher expenditure on free medical treatment, free/subsidised food grains and free grocery kits, sectoral support schemes and capital spending.

Case for infra spending

In a memorandum already submitted to the Union Finance Minister, he said it was imperative to increase infrastructure and capital spending in order to give more impetus to economic recovery. It is in this connection that the Kerala government has mooted a 529.45-km semi high-speed rail (Silverline) project connecting Kasaragod and Thiruvananthapuram.

This is to be implemented through the Kerala Rail Development Corporation, a joint venture company of the State government and the Ministry of Railways. Balagopal requested Central support for the project and expedited approvals.

He also demanded State-specific packages in the Union Budget to rejuvenate production and quality employment in sectors such as agriculture, agro-processing industries, micro-small and medium sectors and other unorganised services sectors in the State.

Capital incentives sought

Balagopal sought also capital incentives for intra and international collaborations for vaccine manufacture and research in medical devices in the lines of Centrally sponsored projects. He recalled that the Union Budget 2021-22 had provided ₹ 35,000 crore for the healthcare sector. An allocation to the States can be made from this amount.

Meanwhile, Bijoy P Pulipra, a leading corporate and financial professional, said that the Union Budget may seek to limit potential damage to the productive sectors by going in for a fiscal expansion funded through higher government debt.

In order to boost the growth of the economy, the Budget may adopt a counter-cyclical fiscal policy to spend more. Drawing a parallel, he said that post-Asian financial crisis (1997-98), growth of the Indian economy had slowed down to an average of 5.3 per cent in real terms. But the government chose to go for a expansionary fiscal policy focusing on infrastructure spending.

Counter-cyclical policy

Government expenditure increased consistently during the years that followed, which led to general government debt reaching record levels. This had helped the economy to revive on a much faster pace. Increase in productivity helped generate more taxes and thereby reduce debt. .

J Hareendran Nair, Founder and Managing Director, Pankajakasthuri Herbals India, said that the pandemic has brought a lot of positive focus on the efficacy of Ayurveda in ensuring and maintaining health over the longer term. During the two pandemic years so far, people in India and abroad have embraced Ayurveda like never before.

GST on Ayurveda medicine

But the industry has been facing a scarcity of raw materials, leading to higher cost of production, Nair explained. GST rates of Ayurveda medicine ranging from 6 to 18 per cent have been a major dampener in this context.

“It would be a desirable if the Centre incentivises and supports the cultivation of herbal medicines and reduce the GST rates on end-products. Alternatively, it may announce measures to attract more global and domestic investments to Ayurveda,” Nair said.

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