When China embraced free markets and capitalism in the post Mao era of late 70s, Deng Xiaoping famously said "It doesn't matter whether a cat is black or white, as long as it catches mice." Ideology made way for pragmatism for the Left front as Kerala FM Balagopal rolled out the red carpet for private sector investments in higher education as well as other sectors in his third budget. And his proposal for special development zones in partnership with private sector also is from the Chinese playbook of late 70s. More than any spending or revenue raising proposal, this shift in policy stance was the notable feature of this budget.

So what else was in the budget? Government had sold the story of Centre fiscally strangulating the state so well that it was a budget with very low expectations despite being a pre election one. Before going to the budget estimates for FY 24-25, let us first look through revised estimates for current FY

Revised estimates for FY 23-24 – Revenues and spending for current FY has been revised downward by 4.36%. Both own tax and non tax revenues have been revised downwards. Expenditure figures show that while capital expenditure has increased by 1.5% as per revised estimates, revenue spending has been revised downwards by 5%. In other words, though spending has gone down, quality of spending has gone up with an upward revision to capital expenditure. Collections from land revenue and taxes on vehicles are the two heads with a robust upward revision, showing that there are sections of people who are not as stressed as the government. As for central transfers, there was a steep downward revision of 26.50% in grants in aid amounting to Rs 4206 Cr

Budget estimates for FY 24-25 – Growth is own tax and non tax revenues expected is 10% and 9% respectively and seems realistic considering the current state of the economy. It maybe noted that higher double digits growth expected in these heads last year has been revised downwards. Another point of interest is that compared to FY 21-22, expenditure under both education and medical & public health is showing a decrease as per budget estimates for 24-25.

Resource mobilisation – Duty on electricity shows a steep rise, with next FY collections projected almost 3 times the revised estimates for current FY. This will be inflationary, as already power tariffs have seen a rise under other heads. Another source of expected revenue is sales tax and VAT. In non tax revenues, as always lotteries will bring in the biggest chunk. For every 4 rupee of non tax revenue, 3 rupees will be brought in by lotteries, though this is the gross receipts and net receipts after payment of prizes and costs is not available. Share of central taxes is showing a 12% increase while grants in aid is showing a mild dip.

Revenue expenditure – Committed expenditures of salaries, pensions and interest as a percentage of total revenue receipts is still showing a fogure of 70.66% and 50% is taken away by salaries and pensions alone.

Move away from NPS – FM has not forgotten his employees and three announcements evidenced that. One is the payment of one DA arrear instalment in April itself, next is an annuity payment for retirees and third was an assured pension plan instead of NPS. But the substitute for NPS is to be studied, by who else but a committee. Is it, as alleged by opposition, a case of pulling wool over the eyes of government employees? Only time will tell.

To conclude, even though the FM didn’t spell out explicitly his plan B in the face of central apathy, it seems opening up of economy to the private sector, especially in education and healthcare and thus boosting economic activity is his implicit plan B.