Vol. XLI No. 12 March 19, 2017

KERALA: Budget and Annual Plan for 2017-18

V K Ramachandran

THE budget of 2017-18 is an expression of the commitment of the government of Kerala to take bold and imaginative decisions in the service of the people, despite resource constraints and the inequalities of centre-state financial relations.

Every budget has plan and non-plan components. This year, in a budget that envisages plan plus non-plan expenditure of more than Rs 1,19,601 crores, about one-quarter comes from plan expenditure. At the same time, the plan expenditure generally accounts for a disproportionately large share of new schemes and programmes announced in the budget, and is, therefore, a reflection of the policy thrust of the government. Of the non-plan component of more than Rs 92,000 crores, more than Rs 63,000 crores was accounted for by salaries, pensions, and interest payments.

If we were to summarise the major functions of the annual plan for 2017-18, they are the emphasis that the government of Kerala will give to

·                     the four missions;

·                     the productive sectors (that is, agriculture and industry);

·                     social development (particularly, with respect to social protection, social justice, and gender equality); and

·                     people’s planning by local governments.

We shall take these points individually.



The annual plans and budget seek to support the effort to build a new Kerala through the four missions announced by the government of Kerala. The missions emphasise sustainable development and peoples’ participation in the following fields:

High-quality school education: An allocation of more than Rs 160.15 crores has been made for special support for the mission on education, and of Rs 84 crores for other thrust areas in school education.

People-friendly health facilities (Aardram). Special support for the Aardram Mission will go towards developing super-speciality facilities in selected district and general hospitals; developing the primary health centres as family health centres; establishing laboratories in primary health centres; the patient-friendly hospital initiative; and revamping existing infrastructure in institutions and the maintenance of high end equipment in medical colleges.

Haritha Keralam. Investing in nature-friendly agriculture; waste management, a clean environment, and a litter-free Kerala; and clean water bodies and enhanced water resources.

LIFE (livelihoods, Inclusion, Financial Empowerment). Providing secure housing and livelihoods.



The second area of economic policy that the annual plan and budget emphasise is production.

The failure of agricultural growth has been a major feature of the XII five-year plan in Kerala. There has been an actual decline in the value of agricultural output over the years. The main feature of the budget in agriculture is to re-establish growth, first in the production of rice and vegetables, and then extending the programme of growth to other horticultural and field crops. The plan and budget envisage the establishment in Kerala, for the first time in India, of special agricultural zones.

The increase in annual plan allocations for agriculture as a whole has been 15.6 percent. In addition to allocation for crop cultivation, the plan has also increased allocations to allied activities such as fisheries (43.6 per cent), animal resource development, dairy development, value addition, and agricultural research and education. Significant increases in free plan (76.8 percent) and state plan (60.7 percent) allocations have been made for minor irrigation projects.

With regard to industry, the major emphasis is on the revival of state public sector units engaged in modern manufacturing, with a special thrust on encouraging women entrepreneurs. As a result, the annual plan outlay for medium and large-scale industries (including PSUs) will increase by 65.5 percent.



The engine of economic change for which Kerala is justly famous in India and the world is the investment that it makes in its people. This effort was spearheaded by the first ministry of 1957 and continued – particularly by governments of the Left and in response to people’s movements – thereafter. Kerala’s achievements in human development are the basis of its national and international fame. Kerala leads the states with respect to the achievement of the United Nations Sustainable Development Goals that are to be achieved by 2030.

The present annual plan and budget are an effort to build on that legacy – in addition to the investment that is planned for the four state-level missions. There are many aspects of government policy in this regard; we shall emphasise five major points.

First, the annual plan and the budget adhere, as highlighted by the finance minister in his budget speech, to the principle of gender budgeting, that is, the allocation of more than 10 percent of total expenditure to schemes that are of direct benefit to women and children. The main thrust areas for gender development across departments are, first, skill development, employment generation and livelihood support, prioritising vulnerable women and keeping in mind women’s need for child care and an enabling work environment. The second area is the prevention of gender-based violence, and for redressal and rehabilitation.

With respect to gender, a pioneering effort has been made in the budget. The finance minister announced that an “amount of Rs 10 crore has allocated for providing pension, educational facilities and health assistance to transgenders and also to provide financial assistance to their organisations and for fairs.”

The second is the allocation envisaged for the people of the Scheduled Castes and Tribes. At the Census of 2011, the proportions of Scheduled Castes and Scheduled Tribes in the state population were 9.1 percent and 1.45 percent respectively. As the finance minister made clear in his budget speech, plan allocations for the Special Component Plan (SCP) and Tribal Sub-Plan (TSP) are, respectively, 9.8 percent and 2.8 percent. In fact, the plan allocations for SCP and TSP in Kerala's Annual Plan for 2017-18 are higher than an allocation made on the basis of the population shares of SCs and STs by Rs 188 crores and Rs 366 crores respectively.

With regard to the central government, however, as the table below shows, the share of central allocations for schemes meant specially for the people of the Scheduled Castes and Tribes fall far below the corresponding shares of the population.

Table 1 Allocation for Special Component Plan and Tribal Sub-Plan as shares of total budget outlays, Union Budgets of the Government of India Rs crore













Shares of SCs and STs in India’s total population (2011)




In the Central Budget for 2017-18, the allocations for welfare of Scheduled Castes and Scheduled Tribes as a proportion of the total budget estimate are 2.1 percent and 1.3 percent respectively. As a proportion of capital expenditure, the share of allocation for welfare of Scheduled Castes is 0.07 percent and allocation for welfare of Scheduled Tribes is 0.1 percent.

 The very fact that the central budget has shifted from a committed share of allocations to welfare schemes is, of course, a matter of much concern. By contrast, the government of Kerala, in keeping with its egalitarian goals, has not only committed a share of total allocations to Scheduled Castes and Tribes, but has also increased that share.

Thirdly, in keeping with the letter and spirit of the Prohibition of Employment of Manual Scavengers and their Rehabilitation Act (PEMSRA) of 2013, the Annual Plan has allocated Rs 10 crore to complete the process of mechanisation of the collection, transport, and disposal of human waste. The finance minister further announced that a sum of Rs 150 crores will be raised through the Kerala Infrastructure Investment Board (KIIFB) for establishing 14 septage units, one in each district..

The fourth area in respect of social development that needs to be emphasised is the new investment on facilities for persons with disabilities. The increase in this regard is 35 percent.

The fifth area is that of pensions. Kerala will be the only state where every person above the age of 60 years (other than those with prior pensions, income-tax payers, and persons who hold more than two acres of land), will receive a social security pension of Rs 1100 per month.

This year, a new feature of economic policy is the part to be played by the Kerala Infrastructure Investment Board (KIIFB). KIIFB is an important innovation.

Some background is necessary to explain the need for such an institution. In India’s political system, although states have to undertake the most important tasks – whether in the fields of production, social development, and in infrastructure – the bulk of development funds are held by the central government. In addition, the Financial Responsibility and Budget Management Act – introduced by the Congress Party and endorsed enthusiastically by the BJP – bans the state government from using the instrument of deficit financing for vital investments for the people. State governments are thus compelled to look for sources of heavy investment outside the plan. KIIFB is an institution that seeks to raise funds for pro-people public investment, concentrating on projects that are important for equitable growth.

The foregoing is a brief summary of the main thrust areas of the annual plan and budget for 2017-18. In sum, the budget presented by the finance minister not only attempted to consolidate the proud record of the Left in Kerala in respect of social development and social welfare, but also strengthened investment in the vital spheres of production and infrastructure. These are an indispensable foundation for economic progress in the years to come.

(The writer is Deputy Chairman of the Kerala state Planning Board.)