Rejecting the Opposition charge that the 2011-12 budget presented by him in the Assembly on Thursday is a fanciful one that promises too many things at the expense of the incoming government, Finance Minister T.M. Thomas Isaac has said that his is ‘a budget for continuity' that presents a bold vision for the future of Kerala.
Dwelling at length on the salient features of his sixth and final budget in the present government and taking a volley of questions from reporters at his post-budget press conference, Dr. Isaac said the general approach of the budget and the specific proposals contained in it were in continuation of the process that he had set in motion five years ago with an alteration memorandum to the budget presented by the United Democratic Front (UDF) government before the 2006 Assembly elections.
The Finance Minister said his attempt was to present a bold vision about Kerala's future as a modern economy and a knowledge society which also provided ‘cradle to grave social security' to large sections of the people. The budget, he pointed out, presented a new business model for infrastructure development and envisaged heavy investment in social infrastructure. “My message is simple: We should dare to think big. And I am sure we can do that if our logic is correct,” he said.
Asked to respond to the criticism that he was late with his new business model for road infrastructure development, Dr. Isaac said he could attempt it only after consolidation, which was his attempt during the last four years. The UDF government had left a burden of Rs.2,500 crore in payments due to PWD contractors besides heavy arrears in welfare pensions. For the LDF government, funds were never a problem, as was evident from the doubling of government expenditure over the last five years, he said, but admitted that inefficiency of the system had come in the way of achieving the pace of development that he had set for the government.
On the ways proposed to fund infrastructure development, he pointed out that there were traditionally two ways of funding such initiatives, the first by going in for borrowings and, the second, by choosing the Build-Operate-Transfer (BOT) route. Given the Central cap and the high cost of borrowings, the first was virtually a non-existent option and the BOT route was fraught with several difficulties. Since the State government could not borrow money, his policy was to clean up the balance sheets of government bodies and enable them to mobilise funds. This was done in the case of the Kerala Financial Corporation (KFC) and the Kerala State Financial Enterprises (KSFE).
The same was being done in the case of the Road Fund Board and the Roads and Bridges Corporation with infusion of funds to clean up their balance sheets, the Finance Minister explained.
To the question how he proposed to finance the other ambitious schemes and projects announced in the budget when there was no additional resource mobilisation, Dr. Isaac said the tax buoyancy, which was in the region of 20 per cent at present, would itself take care of the expenditure. Once the Goods and Services Tax (GST) was implemented, there would be a 30-35 per cent spurt in Kerala's tax earnings.