Kerala finance minister Dr Thomas Isaac presents Kerala budget 2016 on Friday. Photo: Manoj ChemancheriFor Kerala Budget 2018 live updates, more news and analyses click here.
Thiruvananthapuram: All eyes are on T M Thomas Isaac as the finance minister prepares to present the first Kerala budget after the rollout of the Goods and Services Tax (GST). Friday morning budget watching would be a different experience as the state minister is left with very few powers on taxation in the GST regime.
Still Isaac could hurt family budgets when he tries to boost government revenue and rein in expense to tide over a difficult cash crunch. He can still change the tax structure on alcoholic beverages, petroleum products and motor vehicles apart from fees for services like property registration.
Isaac’s third budget speech in his current stint as the finance minister would be shorter by about an hour because he neither has a long list of new taxes nor a shower of sops to present. He is expected to start his speech at 9 am and wind up within an hour and a half.
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Higher fees
The state government’s second-biggest revenue source is the not-tax revenue. The government earned Rs 11,360 crore in non-tax revenue last year. Isaac is expected to increase fees for various government services by 50 per cent, according to modest estimates. The government could boost its coffers by about Rs 5,000 crore with such an increase.
Taxes look up
The state is left with only four areas to tax after the GST - motor vehicles, alcoholic beverages, petroleum products as well as registration fees and stamp duties. The state government is unlikely to increase its share of tax on petrol and diesel because the prices are already high. The Left Democratic Front government has already increased the registration fees and stamp duties after it came to power and even rolled back the hike. So it is unlikely to go through the process again.
More welfare pensions
An increase in social welfare pensions was one of the biggest announcements in last year’s budget. Pension was increased by Rs 100 to Rs 1,100. Isaac is expected to raise the amount by another Rs 100 this year. He has already found a way to fund the increased burden on the coffers - the government is about to crack down on people who draw double pensions and who lead a luxurious life. The finance minister has a model in the food department’s weeding out of those who had been taking home food subsidies illegally.
No big-ticket schemes
Ambitious projects may have to wait. A project to provide free internet connections to families below the poverty line may be shelved this year. The minister is expected to give priority to projects already announced in previous budgets. Still the focus on social welfare measures are unlikely to shift. The minister has already dropped hints about a revival package for the ailing Kerala State Road Transport Corporation. There could be more packages for the troubled public sector units.
Fisheries package
Isaac will have the catastrophic Cyclone Ockhi in mind when he draws up the budget. He is expected to announce a Rs 500 crore package for the comprehensive development of the fisheries sector.
Tightening the belt
The state government’s revenue growth has slowed down to a modest 7 percent but that has not stopped the various departments from splashing money. The public expenditure has expanded by 22 percent. Continuous borrowing has put the state’s finances in a fix. The finance minister has assured to keep the fiscal deficit below 3 percent of the state’s gross domestic product. All indications lead to an austerity drive.
Read: Latest Kerala News | Kerala optimistic of positive turnaround in revenue growth: Economic Review
