Vol. XLIII No. 07 February 17, 2019

Kerala Budget 2019: A Road Map for Rebuilding Kerala

K N Harilal

IT is cliché to say that the finance minister had to overcome ‘unprecedented challenges’ in making the annual budget. But,  T M Thomas Isaac had to literally overcome formidable and unprecedented challenges in preparing the annual budget of the state for 2019-20. The state’s economy as well as its exchequer was subjected to severe shocks in the recent past by natural and manmade disasters. The ‘note ban’ and the haphazard introduction of GST had severe adverse consequences on economic activities, especially small and medium enterprises and petty commodity producers. Added to this was the effect of natural disasters such as the cyclone Ockhi and the massive floods of August 2018. According to the post disaster need assessment (PDNA) report submitted by the UN experts, the combined loss on account of the deluge was to the tune of Rs 21,000 crores. The disasters demanded major increase in government expenditure. At the same time tax and non-tax receipts of the government suffered significantly. In addition, the state government had to encounter a blatantly hostile policy posture from the part of the central government. It prevented United Arab Emirates and other countries from offering help to the people of Kerala during the hour of the crisis. But, the same central government refused to offer any special package of assistance to the state. Further, it refused to raise the borrowing limit of the state set by the FRBM Act. The centre was quite stubborn on this aspect despite recommendations by committees appointed by the union government and the favourable decision of the GST council. To cut the story short, the central government did everything to ensure that the state had a severely constrained fiscal space in addressing the crisis situation. Moreover, the central government intervened to cut drastically the last tranche of borrowings for 2018-19, that too on flimsy grounds. In spite of such road blocks, the LDF government had succeeded in presenting a budget that lay a credible roadmap for rebuilding the state’s economy and society.

As it was made amply clear by Chief Minister Pinarayi Vijayan, the people of Kerala would not be satisfied with a repair and rehabilitation plan alone. The state should transform the crisis into an opportunity to correct past mistakes and to build a new Kerala. It is exactly this dream that the new budget is promising to achieve.

Rebuilding Kerala and restoration of livelihoods are the two overwhelming priorities of the budget. It announces integrated packages for both these goals. But, the focus on the new priorities necessitated by the crisis is not at the cost of the continuing development and welfare programmes of the state. In other words, the goals of the 13th Five Year Plan of the state set earlier will not be compromised. On the contrary, what the government hopes to achieve is a cautious integration of continuing programmes and the imperatives of rebuilding and livelihood restoration. The budget has announced twenty five integrated programmes which included major initiatives in the area of development of infrastructure, where the state was running a huge deficit with obvious adverse consequences for attracting investment and furthering economic development. Major infrastructure projects in the state such as Kochi Metro, Kannur Airport, Vizhinjam Harbour, Inland Waterways, National Highways, GAIL Pipeline, Inter-state power transmission grid, etc are progressing well. In addition, there are efforts to transform the road infrastructure into design roads, to build Costal and Hill Highways and to go ahead with a new railway line between Kasargod and Thiruvananthapuram. Similar initiatives are present with respect to industry/information technology parks and related connectivity. The emphasis on infrastructure has already started producing results in the form of increased inflow of private investment. But, rebuilding Kerala project places equal emphasis on the role of public sector enterprises. There is conspicuous improvement in the profit performance of public enterprises in the state. Number of units making profit and the overall profit has registered remarkable progress over the last two years. Therefore, in sharp contrast to the disinvestment strategy of the centre, Kerala is increasing investment in public sector units. In the rebuilding agenda, adequate importance is placed on agriculture, allied activities, environment and social welfare. The second Kuttanadu package, river restoration, programme for reviving plantation crops, etc are worth special mention. Obviously, the LDF government cannot compromise on its commitment to welfare and social justice. The welfare pension, which reaches nearly 42 lakh beneficiaries, is enhanced from Rs 1100 to Rs 1200 per month. The health insurance programme of the state is broadened to cover more people and to ensure scaled up benefits. The allocation for the gender budget is enhanced substantially. The rebuild programme will extend more attention to the on-going projects designed to improve public health and public education in the state. In addition to the 25 integrated programmes listed, the budget sets apart another Rs1000 cores for rebuilding projects being prepared by a high power committee appointed for the purpose. More allocations for the purpose will be made in the coming years.

Coming to livelihood restoration, around Rs 4,700 crores is earmarked for the purpose. Some of the livelihood schemes are continuing schemes. But, there are also special new programmes announced for the flood affected areas. For instance, a package of Rs 250 crores will be given to the local governments in the flood affected areas for livelihood restoration. This is in addition to the normal plan grant-in-aid given to such local governments. Further, Kudumbashree will implement an additional livelihood programme with an allocation of Rs 70 crores in the flood affected areas. The livelihood package also includes a credit plan focussing on the affected areas. Financial institutions, especially co-operative banks will play a major role in extending credit to the needy. The budget also declares a programme for creating employment in the affected areas by making effective use of the MGNREGS. Because of a special drive initiated after the floods, the number of days of employment created under the scheme registered sharp increase. The target for 2019-20 is ten crore employment days. In urban areas the Ayyankali scheme will be used to create additional employment.

The budget was received with enthusiasm and support of the people, media and the experts. But the opposition raised questions regarding the viability of the programme announced. Given the poor track record of project implemention in the state, especially under the previous UDF government, such queries cannot be easily dismissed. But the implementation track record of the present government, which had improved by leaps and bounds, is a fitting answer to the question. Recently a study by the Niti Aayog on Sustainable Development Goals (SDGs) ranked Kerala first along with Himachal Pradesh. There are many such instances where Kerala received kudos for its success in project implementation and better outcomes. It is this notable improvement in project implementation, widely appreciated by the people of Kerala that gives them the confidence to back the state government to build a new Kerala, which will improve upon the gains of the past and reach new heights of equitable and sustainable development.