Revised Kerala budget proposes₹12,000-cr stimulus package

Kerala Finance Minister Thomas Isaac has announced additional resource mobilisation of ₹805 crore in a revised State budget for 2016-17 that envisages a special stimulus package of ₹12,000 crore.

The package is the second to be announced in the State after 2008, but has surpassed the earlier one by ₹7,000 crore in the first budget of the Pinarayi Vijayan government.

Isaac gave away a ₹5 crore in concessions as he vowed to boost infrastructure spending and asserted his resolve to secure the livelihoods and welfare of the poor.

Capital expenditure Capital expenditure of ₹1 lakh crore has been envisaged during the next five years, largely through recourse to off-budget debt funds raised through special purpose vehicles.

The budget also seeks to raise ₹8,000 crore for acquiring land for setting up industrial parks and rolling out allied infrastructure facilities.

According to the Finance Minister, the accent would be on achieving a new paradigm of sustained and rapid growth while ensuring the welfare of the poor and the indigent.

All welfare pensions have been raised to a new monthly minimum of ₹1,000 in a decision that was widely anticipated, given pointed references to it at various levels during the run-up to the budget.

New initiatives have been announced to clamp down on corruption and inefficiency in tax administration. The budget has set out to raise tax collections by at least 22 per cent during the current financial year.

New levies While announcing additional resource mobilisation, the Finance Minister imposed a five per cent tax on coconut oil, which is expected to bring in ₹150 crore.

He proposed to raise ₹50 crore by revising the levy on textiles from one per cent to two per cent.

He also announced a five per cent tax on packaged products made out of wheat, maida, sooji and rava. “The consumer has not benefited despite of a tax reduction on these since the MRP have remained the same,” Isaac said.

He also went on to impose ‘fat tax’ of 14.5 per cent on pizza, burgers and tacos. Others expected to attract the levy are doughnuts, sandwiches, pasta, burger patty and bread-filling. Expected revenue is ₹10 crore.

While explaining the circumstances leading up to the revised budget, the Finance Minister said that for the first time in the last 20 decades, growth had fallen below the national average.

If the recession were to prolong in the oil economies in West Asia, it would lead to drying up of remittances to the State, worsening the crisis.

Revenue deficit This will effectively set the clock back on growth that had blazed a trail since the 80s, Isaac said. The estimated revenue deficit of ₹13,066.25 crore for 2016-17 is a grim reminder of the state of affairs.

The Finance Minister expressed apprehension that if left unattended, this would race away to ₹20,000 crore by the end of the financial year and cripple the economy.

So the attempt is to cut down on revenue expenditure and divert some of it to the capital side. This could be leveraged later to raise resources outside the budget, h reasoned.

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