Kerala keeps fingers crossed with high expectations riding on Union Budget

Kerala has big expectations riding on the Union Budget 2023 to be be presented by Union Finance Minister Nirmala Sitharaman on Wednesday. The State’s official wish list contains specific requirements concerning infrastructure, relief packages, fiscal policy, and social welfare.

Kerala is eyeing a special rehabilitation package for ‘return migrants’ in the Budget. During the pre-Budget consultations, the State had reiterated its long-pending demand for an AIIMS-equivalent medical institute and the inclusion of the Malabar Cancer Centre in the Rashtriya Arogya Nidhi Programme.

Further, the State government wants special schemes for supporting traditional sectors such as cashew, coir, handloom, and agriculture which, according to it, are facing ‘‘serious challenges”.

On the technology/industry front, Kerala is eyeing financial incentives for establishing manufacturing units for components of semi high-speed trains, lithium-ion batteries for e-vehicles, and R&D projects for vaccines. In the matter of air travel, Kerala has urged the Centre to grant ‘point of call’ status to the Kannur international airport for attracting more foreign carriers.

The State hopes for special support for its unique Ayyankali Urban Employment Guarantee Scheme. It also wants the Centre to revamp the National Social Assistance Programme by including more beneficiaries and enhancing the aid. At present, the Centre annually provides ₹250 crore for six lakh people with the monthly aid in the ₹200-₹500 range.

Several key Budget expectations concern the State’s declared stand on fiscal policies and its emphasis on cooperative federalism.

Kerala wants the Goods and Services Tax (GST) compensation period extended by another five years and the Revenue Neutral Rate (RNR) — down from 16% to around 11% — enhanced by taxing luxury goods more. The shareable portion of GST should be increased from the present 50:50 ratio to 60:40 in favour of the States.

The State seeks a more rational approach to the cesses and surcharges collected by the Centre which have risen from 10.4% of the Gross Tax Revenue in 2011-12 to 19.90% in 2020-21. This has effectively reduced the share of States from the divisible pool.

With regard to Centrally sponsored schemes, Kerala wants the Centre-State sharing pattern enhanced from 60:40 to 75:25. Kerala also wants the Budget to park a ‘‘distinctive flexible pool’‘ for meeting the funding requirements of State-specific proposals.

Kerala is also eyeing a favourable decision from the Centre so that the Kerala Infrastructure Investment Fund Board (KIIFB) and the Kerala Social Security Pension Ltd (KSSPL) borrowings are treated as contingent liabilities.