KERALA BUDGET '24

Analysis | Has Balagopal dumped leftism for neoliberalism

It looks like the Left Democratic Front government has been forced by the Centre's relentless attack on classic Left models like KIIFB to take a sudden and aggressive right turn. K N Balagopal's fourth budget, by unreservedly wooing private capital, has offered the first draft of the CPM plan to jettison Left ideals and embrace neoliberal thinking with a vengeance.

Kerala Infrastructure Investment Fund Board (KIIFB) was the anti-capitalist alternative the CPM had put forward to fund public infrastructure without private capital. Like in any legitimate socialist regime, the public is not charged for KIIFB-engineered social assets - schools, hospitals, roads, bridges, irrigation canals, transmission lines. No tolls, no user fees, no levies.

The BJP-led NDA government, however, incapacitated the model saying its borrowings should figure in Kerala's deficit calculations. KIIFB, therefore, cannot be put to use for the very purpose for which it was originally created, to bypass budgetary restrictions.

How is Kerala now going to finance its infrastructure in this post-KIIFB phase. Balagopal provides the answer in his budget speech. "Instead of waiting for justice from the Central Government, the State Government will utilize all its resources to raise capital investments from private and public sectors," the finance minister said in his budget speech on Monday.

It is from the private sector that Balagopal is expecting a bounty: Rs 3 lakh crore in three years. KIIFB's initial promise was Rs 50,000 crore in five years. Balagopal expects the private sector to pump in infinitely more.

If till now the LDF government was keen on developing social infrastructure, Balagopal has in his fourth budget made a call to the private sector to crowd in and exploit the commercial possibilities of Kerala tourism and the mega projects Kerala has on offer, namely in Thiruvananthapuram's Vizhinjam and Kochi where Prime Minister Narendra Modi had recently inaugurated the dry dock at Cochin Shipyard, International Ship Repair Facility and LPG import terminal at Puthuvypin.

Balagopal called Vizhinjam "the development gateway to Kerala of the future". He said that the government would create Special Development Zones (SDZ) in Vizhnjam and deck them up with glittering tax breaks and other incentives for private players to profit from its possibilities. Balagopal said Kerala's forests, too, would be thrown open for private investment.

The CPM's association with special economic zones (SEZs) is complex. It was highly critical of the SEZ policy the UPA government had introduced in 2013 and continues to be censorious of the special favours offered to oligarchs like Adani in the name of SEZs. However, way back in 2007, the party had wanted to establish one at Nandigram in West Bengal and got itself politically obliterated in the state.

Perhaps why Balagopal qualified his laissez-faire proposal by linking it to the Chinese creation of development zones in the early 80s. China has always been CPM's pride.

In 1980, Deng Xiaoping, the then paramount leader of China, had established four SEZs in Shenzhen, Xiamen, Zhuhai, and Shantou provinces where free-market reforms were implemented; four capitalist havens in a sea of communism. It was the development boom stoked by free market reforms in these four SEZs that propelled China to emerge as a modern economic powerhouse.

Balagopal might have taken heart from Deng Xiaoping’s famous quip about market reforms: "It doesn't matter whether a cat is white or black, as long as it catches mice."

The finance minister sounded not just unapologetic but also proud of the achievements of the private sector. "Private investment is not against our policy," he told Onmanorama. "There are certain models that helped China a lot. Here in Kerala, too, private investment is spurring growth," he said.

Balagopal then spoke of the building he inaugurated the other day. "It was building named Niagara owned by Taurus (a construction consultancy). It is a massive building, sprawling 15 lakh square feet. They say they are planning two more such buildings, at an investment of Rs 3,000 crore each. What is wrong in such investors coming? Moreover, 40% of the employees of such companies belong to other states. We want such people to find Kerala attractive, and creating such an ambience is part of the LDF policy," Balagopal said.