Kerala Finance Minister TM Thomas Isaac is a former Economics professor. He is active on social media, blogging his ideas on Kerala’s economic development; he also writes frequently for newspapers on the State’s economy.

However, the (revised) State budget he presented on Friday, the first of the new government, was more political than economic. The budget, to a large extent, addressed the ‘populist’ promises of Left Democratic Front.

While Isaac said the budget aimed at lifting the economy from the current economic recession and financial crisis, it laid stress on welfare measures catering for the political constituency which sent the CPI (M)-led LDF to power.

By and large, the budget reflects the hopes and promises given to the Left electorate, rather than addressing the crisis looming over the economy because of the heavy fall in the prices of commodities, particularly natural rubber, and dwindling remittances by the Gulf Malayalees.

As part of a slew of welfare dole-outs, Isaac has increased all ‘welfare pensions’ to ₹1,000 a month, with a promise to pay out all arrears before Onam in September. He has allocated ₹1,000 crore for this. All labourers aged above 60 will gradually be covered by the pension scheme.

Benefits announced

There will be an exclusive department for women’s welfare and toilets for women will be set up in all towns.

The third gender will, for the first time, be eligible for welfare payouts. The differently-abled and women abandoned by husbands for more than five years, will be among the beneficiaries of the social security scheme. Isaac announced that his government was aiming to provide all households with water, electricity and toilets in five years. The homes-for-all aim will also be achieved in five years. There has been greater allocation for government schools and hospitals. Isaac has also announced a ₹12,000-crore package to fight recession, saying the State was now facing a situation it had faced in 2008. At that time, Isaac, who was the Finance Minister in the VS Achuthanandan government, had announced a ₹5,000-crore recession package.

But, where will the money come from? Resource mobilisation for the grand welfare schemes and for the recession package is the most unrealistic area of Isaac’s proposals. He has refrained from imposing heavy taxes that will draw flak from the Left’s constituencies, and has relied heavily on tax collection. He hopes to increase tax collection by 25 per cent by ensuring better compliance and employing technology.

In view of the State’s financial ill-health, Kerala was mentally prepared for a higher tax burden, financial discipline, spending cuts and thrift. It had expected the Left government to be more demanding with taxes and stricter with spending.

But, Isaac has opted to be more a politician than an economist and economic reformer, and turned the budget into a ‘thank-you’ note to those who voted the LDF to power.

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