Expectation was rife about what Kerala Finance Minister K N Balagopal would do in his budget maths to provide for welfare and development as the tiff with the Centre over the state’s borrowing limit being curbed had reached the Supreme Court where the hearing starts next week.

His budget for 2024-25 estimates a fiscal deficit of 3.40 per cent with borrowings of approximately Rs 44,500 crore planned for the year, on a total expenditure of about Rs 1,84,000 crore.

Resource mobilisation efforts were modest. The common man may not have anything to complain. What stood out was the determination of the Government to persist with big-ticket investments and push for public-private partnerships in most sectors.

The Finance Minister made some pragmatic moves, untrammelled by the trappings of ideology, to attract the private sector into areas like tourism, setting up of universities, industrial parks, “Chinese-model” special development zones and a massive flagship international residential-commercial complex at Marine Drive, Kochi.

From the perspective of a growth-push, the promise that the Government plans to take up construction of houses costing Rs 10000 crore under its LIFE (Livelihood, Inclusion and Financial Empowerment) Mission for the poor in the next two years is also a welcome move.

“Programmes are being planned to attract investments to the tune of Rs 3 lakh crore within the next 3 years,” he said.

Hubs appeared to be the catchword in the programme for attracting investments into the State.

The first is a plan to create a “growth hub” around Vizhinjam port, set to become operational by May, 2024. The government aims to make Vizhinjam a centre, encompassing townships, residential and commercial areas, warehouses and entertainment zones, requiring huge investments. “Vizhinjam is on the cusp of being the central piece of the commercial corridor that will grow around it.

There is a need to channel large-scale investment to transform Vizhinjam port into an entity which can compete with the other prominent ports around the world. This development can be possible only through a combination of public funding, public-private partnerships as well as private sector investment,” he said.

Secondly, the Government proposes to provide “special incentives and packages” for transforming Kerala into a “higher education hub”. The State will attract private investments for establishing new higher education institutions in Kerala having international standards in partnership with the private sector. There has been a significant increase in the number of students going abroad for educational purposes. In 2022, this number increased to 13.2 lakh. It is estimated that 4 per cent of the total Indian students going abroad are from Kerala.

Kerala as a Care Hub for the elderly is the third item in the list. In the near future, 20 per cent of the population of Kerala will cross the age of 60 years. It is true that in a majority of the houses there are none, including children, to lend them support. A scheme will be formulated to set up ‘Care Centres’ in ideal locations across the State for providing health care and protection, according to the Finance Minister.

There were very few give-aways, even as no big taxes were proposed. The support price for rubber was increased by Rs 10. There was also promise of an assured pension scheme for the State Government staff in lieu of NPS. But there is no return to the old pension scheme.

But the key question, end of the day, remained on where the resources to fund these big-ticket schemes will come from. All of this will not come from the private sector and the heavy lifting has to be necessarily done by the Goverrnment. Though the Finance Minister used terms like “out-of-the-box” as he started his speech, measures to mop-up tax or non-tax revenues (like the e-registration fee, court fee et al) were incremental.

The latest liquidity worries of the State Government has thrown a question mark on the sustainability of the Kerala model of development, sans debt. Founded on low-cost education and healthcare, low-tariff public transport, welfare pensions for a whopping 18 per cent of the population, periodic mass entertainment/cultural events at Government expense, this prototype is under stress. The dwindling NRI remittances in the last two years have not helped matters either as purchasing power has eroded and the market sends out signals of a downturn.