Kerala's budget offers little cheer

No one had expected Kerala Finance Minister K. Sankar-narayanan to pull rabbits out of the budget bag, given the precarious financial condition of the state.

Keeping to such pessimism, Sankarnarayanan yesterday presented his budget in the state assembly, amidst protests from the opposition benches, which leaves a yawning revenue deficit of Rs22.03 billion.

As soon as the finance minister got up to present his budget, opposition leader V.S. Achutha-nandan also got up along with all his opposition colleagues and shouted slogans against the budget.

Some of them raised banners stating, "Who wants this ADB budget?", implying that the government had drawn up the budget in accordance with the conditions laid down by the Asian Development Bank, with which it has been holding discussions for a long-term loan.

The budget has left the taxes almost untouched, barring a steep hike in tax of gold jewellery. In all, the new tax measures announced in the budget are expected to mobilise additional resources worth Rs2.84 billion.

The jewellery sector will be the hardest hit by the budget. The rate of compounded tax payable by dealers in jewellery, who have opted for payment of tax at compounded rate, will be increased to 200 per cent of tax payable by them in the previous year.

Sankarnarayanan also decided to extend the levy of additional sales tax of 15 per cent imposed on a variety of goods last year, for one more year. This is expected to net the government an additional revenue of Rs2.25 billion.

The finance minister also slapped entry tax on a variety of goods aiming to prevent movement of high value goods into the state without paying tax.

Accordingly, entry tax will be levied ranging from four per cent on edible and inedible oil, to 37 per cent on light diesel oil. Fans, grinders, cooking ranges, water heaters, electrical wiring cables, and water supply and sanitary equipment and fittings will all attract entry tax of 12 per cent.

Sankarnarayanan, who was involved in a controversy over allowing special favours to chicken farmers from Tamil Nadu at the detriment of the local poultry farmers, decided to impose an eight per cent entry tax on live chicken and meat entering the state.

Understandably, tourism has been given pride of place in government spending during 2002-03. The finance minister set apart Rs500 million in the annual plan for tourism and in addition, earmarked Rs300 million for undertaking various infrastructure projects which are related to tourism development and prioritised by the tourism department.

Rs120 million has been allotted for upgradation and creation of infrastructure at tourist centres all over Kerala, and Rs100 million for promotion and marketing efforts including use of information technology. The government will continue to promote backwaters, ayurveda and eco tourism as thrust areas, Sankarnarayanan said in his 85-minute budget speech.

The finance minister also set apart Rs30 million for taking up local level projects through district tourism promotion councils and Rs10 million for taking up new eco-tourism projects.

The information technology sector has also got special treatment. Rs70 million has been set apart for upgradation of IT infrastructure and creation of new capacities in the state. The government will shortly launch a project which will directly link the international gateway in Kochi with the state's broadband network that is presently under construction.

In contrast, the industry sector has not got a very encouraging treatment. The government is planning to set up four new industrial zones at Thiruvanan-thapuram, Kochi, Palakkad and Kozhikode with active participation of the private sector, for which only Rs10 million has been earmarked in the current fiscal.

The government is also planning to hold a Global Investors Meet to attract investment from abroad.

On the social services front, the finance minister chose women and children for special consideration.

Quoting Mahatma Gandhi's statement that real change in India will come only when women begin to affect the political deliberations of the nation, Sankarnarayanan said he was setting apart Rs1.01 billion towards economic empowerment of women and for creation of jobs for them.

Sankarnarayanan also showered some blessings on children in the state. Admitting that the crisis in the agricultural sector and the acute unemployment had adversely affected the overall development of children in Kerala, he said a new scheme titled 'A cup of milk and a hand shake' was being introduced for children below poverty line in the age group of six months up to primary school level.

The scheme, to be implemented form next year, has been allotted Rs50 million. The entire opposition walked out shortly after the finance minister started reading his budget. The main complaint of the opposition was that the government was succumbing to conditions laid down by the Asian Development Bank.

In a post-budget interaction with the media, Sankar-narayanan denied that the state government was accepting any unfavourable conditions laid down by the ADB. "We will negotiate with ADB with all possible transparency and accept the loan with all transparency. There is nothing wrong in taking a loan if it is put to good use," he said.

He also criticised the opposition walking out of the budget session, stating that it was an undemocratic practice as the budget is for the whole state. Commenting on the budget, Communist Party of India-Marxist MLA Thomas Issac said the budget had not lived up to expectations.

"There seems to be an obsession for the government to focus only on fiscal deficit," he said. He added that a reduced capital expenditure meant that the state's future development chances looked bleak.