THE road map for tackling the challenges thrown by the global economic slowdown and the crisis in the Gulf was laid out by the Pinarayi Vijayan government in Kerala in its first budget. In what is clearly an aspiration-driven budget, finance minister T M Thomas Isaac has sought to give a big push to infrastructure development using extra-budgetary resources, while attempting to raise tax revenue with better tax administration and fresh imposts and provide a healing touch to vulnerable sections. Traditional industries like coir, cashew and handloom also get focus in the budget. Isaac has announced a Rs 12,000-crore package to fight the economic slowdown by taking up major infrastructure projects. The necessary funds would be raised through Kerala Infrastructure Investment Fund Board (KIIFB) issuing bonds, raising term loans from banks and creating funds that have the approval of RBI and SEBI.

The government would stand guarantee for the funds thus raised. Appropriate legislative changes would be brought about and a mechanism created to facilitate this. An ordinance for amending the provisions of the Kerala Infrastructure Investment Fund Board Act would be promulgated within a month and the amended legislation would be placed in the Assembly in its next session.

On the welfare side, the finance minister has announced an across-the-board hike in social welfare pensions to Rs 1,000 per month and promised a comprehensive insurance scheme covering treatment of all major non-communicable diseases. The state government will also bring forward a comprehensive legislation to offer protection to migrant workers, pay pension to transgenders aged above 60 years, and create a separate department for women. Rs 91 crore was allotted for women welfare and development in the budget.

In a bid to strengthen the state’s higher education sector, the highest-ever allocation of Rs 723.53 crore has been made in this year’s budget for universities in the state.

In a bid to make Kerala a hub for higher education in South Asia, a global education meet will be held in the state this year for which Rs 2 crore has been set aside in the budget, Isaac said. “As part of projecting Kerala as a preferred international destination for education in the country, International Higher Education Zones (IHEZ) will be opened in various parts of the state with private sector participation,” he said.

The proposal of an ‘Academic City’ announced in the previous budget has got a lease of life with this year’s budget earmarking funds for meeting its administrative expenditure. The budget has also set aside Rs 50 crore for land acquisition and creating infrastructure facilities for the proposed Indian Institute of Technology (IIT) at Palakkad.

The general education sector has been allocated Rs 1,074.62 crore in the budget with a majority share going towards improving infrastructure facilities in schools. Taking a cue from the quality upgradation carried out in Nadakavu Government School in Kozhikode, the budget has earmarked Rs 8 crore for ‘Mission 100’ - a project to upgrade 100 schools in the state to international standards.

In a first, Isaac has slapped a ‘fat tax’ on food articles of conspicuous consumption such as pizzas and burgers sold through branded restaurants. Land transactions would cost more with the finance minister hiking registration levies. He has slapped a ‘green tax’ on vehicles more than 15 years old and increased levies on stage carriages. Various additional imposts are expected to fetch Rs 805 crore. Fresh levies notwithstanding, Isaac estimates a year-end deficit of Rs 746.69 crore.

In the productive sector, there will be massive deployment of resources to ensure value addition in agriculture through the establishment of a string of agro-parks at an estimated outlay of Rs 500 crore, acquisition of 5,100 acres of land at an estimated Rs 5,100 crore over five years to set up multipurpose industrial zones, adoption of soil conservation as a key activity under MGNREGS, greater mechanisation of the coir industry, creation of Kochi-Palakkad industrial corridor, and a Rs 1,325-crore initiative to promote the IT industry.

In the energy sector, the government’s strategy will be to lean more on solar energy. A beginning in this direction will be made this year by launching a scheme to install solar panels atop homes to generate 1,000 MW power. The government will not impose a blanket ban on creating new posts, but will be restricted to the bare minimum for two years, Isaac said.

Talking to reporters after presenting the revised budget for 2016-17 in the Assembly on July 8, Isaac said there were no restrictions in making appointments to the existing posts, but proposals for creating new posts should be part of the Plan. The Plan Outlay for the current year would not be revised.

Traders would be brought within the ambit of the tax regime. On toning up the administrative machinery, tax compliance has also increased. Tax collection has touched 19 per cent in June. It has been envisaged to sustain the collection rate between 20 and 25 per cent for the next three years, but the government cannot rely on this source in the face of a huge revenue deficit. The fiscal strain on the exchequer would be high for the next three years.

The situation would improve once the Goods and Services Tax regime comes into force. The government would be able to wipe out the revenue deficit by five years. Isaac proposed to form a bank for the state by restructuring the Kerala State Cooperative Bank. Treasury strengthening would be expedited so that government employees as well as pensioners could remit their salary and pension there and draw it from banks of their choice on giving a statement. The funds in the treasury would come in handy for the government to meet exigencies too, he said.

Chief Minister Pinarayi Vijayan said that social security, progress and development are the focus of the budget. “The budget is structured in such a way so as to increase the revenue without burdening the common people. The budget reasserts government intervention in education and health sector also,” Vijayan said. (END)