It is Time for Government to Act Shedding Lethargy


When the LDF Government is in the process of preparing the second budget, it is pertinent to examine the Plan and Non-Plan expenditure patterns in the first year of its rule. Though the Government came to power with a thumping majority and hence, with much fanfare, its initial claims of efficiency and transparency are lacking steam now. This is clear from the poor Plan expenditure of 2016-17. Unaudited provisional figures accessed from the State Government show an average of 27.18 per cent Plan expenditure of 41 major departments, including Agriculture (26.4 per cent) which fell below this meager level. Local self-government institutions with an allotted Plan fund of Rs. 5,500 crore had spent nothing up to September 30.

Budget 2016-17 announced a series of mega projects aimed at bringing about faster growth and development of the State. It had promised coconut agro-parks and vegetable value addition agro parks. But they are yet to materialize. Commercial production and sale of Neera, the pious hope of 35 lakh of coconut growers in the State, are in doldrums.

The Government came to power with the claim that revenue mobilisation would be speeded up. The Finance Minister, in his budget speech last year, highlighted that he would raise tax revenue by around 20 per cent, by bridling check-post corruption, under-reporting of sales by traders, misuse of Form 16 etc. But, so far no effort has been taken to fulfil any of these promises. Demonetisation has adversely affected the economy to a large extent. But that is only from November 8 onwards. The figures mentioned above are up to September 30.


Following proposals may be taken into account in the budget 2017-18

This Government promised to create 15 lakh jobs in the IT and tourism sectors and 10 lakh in MSMEs, agro processing, value addition, and farming-related activities. It also announced that 1500 startups would be sponsored by giving monetary stimuli.

IT growth needs huge infrastructure investments in the IT cities of Kerala – Thiruvananthapuram, Ernakulam and Kozhikode – to raise them to the level of IT metros of India – Bengaluru, Hyderabad, Chennai, Ahmedabad and Mumbai. Kerala Infrastructure Investment Fund Board (KIIFB) should start functioning actively. It is through KIIFB that the Government dreams of pumping Rs.1,00,000 crore into the infrastructure sector during the remaining four years.

Tourism also deserves special attention as slow and sluggish growth of domestic and foreign tourism from 2010 onwards points to the need for proper solid waste management system and better infrastructure facilities at tourist destinations.

Another moot question, perhaps most important of all, is the question of ‘water security’ which was emphasized in the election manifesto. Many studies highlight that desertification of Kerala is happening fast. 2015-16 was a drought year for Kerala. Experts predict even a worse drought situation with 60 per cent deficient rainfall during 2016-17. Scientific water harvesting technologies are being developed by various agencies and individuals, which are still in their nascent stage.

Food security policy of the State continues to be a ‘begging bowl’ approach instead of one based on the Food Security Act of 2013. ‘Per drop more crop’ policy of Central Government highlights the need for maximising the efficiency of water usage.

When the average irrigated crop area is 49 per cent for India, it is only 17 per cent for Kerala whereas it is 64 per cent for Tamil Nadu, which makes use of our water. Therefore, as promised in the 2016-17 budget, cultivation of paddy, pulses, fruits, vegetables and medicinal herbs may be encouraged and water availability and water use efficiency assured.

Agriculture subsidy is now distributed on the basis of Aadhaar. Hence, lease land farmers are unable to enjoy farm subsidy. This may be overcome through a piece of legislation. If 10 lakh jobs are to be created in the farm and MSME sectors, the concept of industrial corridor from Kochi to Coimbatore must become a reality. Similarly, Kochi-Kasargod, Kochi-Parassala and Kochi-Idukki industrial corridors should also be conceived and made a reality.

The election manifesto had promised a department for women. It is yet to be implemented. If women are held in high esteem, as the LDF Government always does, then this promise must be fulfilled at the earliest, with a strong and learned woman as its head.

Fiscal consolidation is not of secondary importance as revenue expenditure has increased unbridled. The FRBM Act re-structuring report was submitted to the Finance Minister by N K Singh Panel. Hence, Kerala Public Expenditure Review Committee (KPERC) may be re-constituted at the earliest. Stamp vendors must be brought under income tax payee category. During the UDF period, because of poor tax administration, vendors were given exemption from income tax payment. Around 700 to 900 vendors are getting undue favour of tax incentives. It is reported that around Rs. 200 crore worth stamp papers are sold in Kerala a day.

On the basis of the existing commission rates – Rs. 1000 (4.5 per cent), Rs. 10,000 (2.5 per cent), Rs. 20,000 (2 per cent) – the approximate income of each vendor is Rs 10 lakh a year. If vendors are exempted from tax payment, it means differential treatment of citizens belonging to the same income bracket. Online registration should be made a law so that exchequer drain is prevented.

Since the Real Estate Regulatory Authority Law and Land Acquisition Laws pave way for better real estate utilisation, affordable housing to all by 2022 and one acre land to each adivasi family should be given high priority in the budget. Agriculture credit should be encouraged and targeted.

NABARD claims to have provided one lakh eighty thousand crore worth loans to Kerala. Out of this, 45 per cent or Rs. 57,600 crore is meant to promote agriculture, 31 per cent or Rs. 39,680 crore for MSME sector and 24 per cent or Rs. 30,720 crore for other priority sectors.

The Assembly is not to be made a ‘Badai Bungalow.’ MLAs have significant roles to play. Put them in different groups and see that plan fund utilisation, land acquisition, Adivasi land-like issues are pursued and monitored by them for the efficient and transparent upkeep of the government machinery so that West Bengal is not repeated in Kerala.


(The author is noted economist and former chairperson of Kerala Public Expenditure Review Committee)