Kerala Budget 2017-18 marks its 60th fiscal year milestone, with an estimated expenditure of ₹1.19 lakh crore or ₹328 crore per day, a gigantic leap compared to the paltry expenditure of ₹30 crore in the 1957-58 budget. This Budget, which offers free Internet connectivity to 20 lakh households, is in astonishing contrast to the first Budget that spoke of an explosive population growth and food shortage. Bold, dynamic and certainly imaginative, the Budget 2017-18 tries to address not only the immediate demand and supply shocks the State economy has suffered due to demonetisation and the adverse impact of the drought, it has also taken into account the crying needs of a poorly maintained infrastructure, along with the requirements of a growing economy. Indeed, the Finance Minister also has to take into account the rising expectations of the poor who constitute the vote bank of the Left.
I would briefly outline the salience of the Budget:
Working towards a comprehensive social security project, including outliers such as barbers and potters (the omission of plantation labour is conspicuous) along with the empathetic coverage of the disabled. A 10% escalation of the pensions of the poor within 10 months is a welcome step given the dearness allowance protection of the civil servants.
The devolution of ₹9,748 crore to the local governments with several measures to usher in a second edition of People’s Planning. But the Finance Minister misses the need for a financial reporting system.
The reintroduction of gender budgeting and initiation of measures towards gender justice in the context of growing crimes against women.
The steps taken to rehabilitate the public sector undertakings, notably the comprehensive package of ₹3,000 crore for the KSRTC.
Although the revenue deficit and fiscal deficit numbers show some increase, there is adequate indication of prudent fiscal management as exemplified in the debt-stock GDP ratio.
No Budget is above reproach and I am surprised by several silences in this Budget. The Budget, for instance, is silent on the dramatic demographic transition under way in the State. While India in general enjoys a demographic dividend, Kerala had it as far back as 2001. Among certain communities in Kerala, the elderly (above 60) constitute 25% of the population. The Central government has to come to the rescue of this government which took to family planning way ahead of other States. The KIIFB is a bold experiment in mobilising funds for taking up infrastructure projects. But it is a loan. How is the Finance Minister going to make it self-liquidating? Kerala probably needs an answer. The speech is also silent about the iniquitous and somewhat arbitrary allocation in non-Finance Commission grants emerging in the Indian fiscal federal polity. Further, the Budget is silent on environmental protection as well as on the social failure in helping the tribespeople. Even so, the Budget is an outstanding initiative.
M.A. Oommen is an economist and expert in public finance
