Union Budget 2023-24: Kerala Again Cold Shouldered

THIRUVANANTHAPURAM: It has become a nauseatingly unredeemable tale of rejection and rebuff for Kerala. True to pattern, the State has once again been given the cold shoulder in the Union Budget. None of the demands made by the state have been accepted.

The only silver lining has been the decision to increase the import duty on compounded rubber from 10 per cent to 25 per cent. While the hike has been widely welcomed, there were doubts whether this will apply for countries under the India-ASEAN Free Trade Agreement (FTA). Compound rubber import has been a matter of grave concern for rubber farmers as it has resulted in the lowering local prices besides affecting compound rubber makers in the country. Since Kerala accounts for bulk of the 7.5 lakh tonnes of natural rubber in the country, the farmers must get around Rs 190 a kg to make cultivation attractive.

The import of rubber in 2022 was five lakh tonnes. Rubber industry devoured most of it , including automotive tyre-making. The tyre industry has been taking advantage of the conditions prevailing in the international market to import compound rubber to the dismay of rubber growers in the country, especially Kerala. The hike in import duty should go a long way in alleviating the misery of rubber growers. Rubber, which constitutes over 80 per cent of Kerala’s plantation crops, is a major contributor to the Agricultural GDP. Because of lower prices many rubber farmers had stopped rubber tapping. Now that the import duty has been hiked, the situation is expected to take a turn for the better.

It is a matter of regret that the State’s wish list has been completely ignored. Topping the list was the demand for extending the period of GST compensation. The budget also makes no mention of the State’s request for the All India Institute of Medical Sciences (AIIMS). Chief Minister Pinarayi Vijayan had recently requested the Union Government to approve the project, saying that the land for it had already been identified. The State Government is, however, going ahead with its plan to set it up at Kinalur in Kozhikode district.

Another relief for the cash-strapped state is that the “Special Assistance” to State for Capital Investment, launched in 2022-23 will continue in the new fiscal as well. The scheme envisages giving 50-year-old interest-free loans to State Governments for capital investment projects. The loan is apart from the normal borrowing ceiling allowed for the states. Kerala had been given Rs 2,500 crore under this scheme in 2022-23. There is no doubt that the loan will be a big relief for Kerala, which has been facing a serious financial crunch because of cuts in the devolution of tax share, revenue deficit grant and the end of GST compensation scheme.

The budget also militated against the concept of cooperative federalism. The public health sector in the state has been ignored by reducing the allocation for the MNREGA rural employment scheme. Kerala, it may be remembered, had sought a hike in the wages for the scheme besides increasing the number of mandays to at least 150 from the current 100. The step-motherly treatment being meted out to the scheme is nothing but petty politics. The partisan politics is also clear from the decision to allocate Rs 5,300 crore to Karnataka, a BJP-ruled state, with an eye on the forthcoming assembly election there.

No less worrying for the State is the budget proposal on result-based financing of schemes. Kerala’s Finance Minister KN Balagopal voiced his concern over the move. The problem, he said, was that although it may seem fair, it is not clear who will carry out the assessment. This will be another blow to the state, which is already suffering because of discrimination in the funding of centrally-sponsored schemes.

No less worrisome is the Union Government’s move to establish multi-purpose cooperative societies, primary fishery societies and dairy cooperatives in uncovered panchayats and villages. It is evident that the move targets the State’s own cooperative sector. This is the first time that schemes have been announced to target the lowest levels of the cooperative sector. According to Balagopal, both the schemes will have a far-reaching impact on the State. Lesser amounts for food subsidy and procurement of rice and wheat are also a matter of deep concern.

The unkindest cut has been the decision to slash the Net Borrowing Ceiling (NBC), which will exacerbate the financial woes of the State which is already in deep trouble because of the Union Government’s refusal to extend the GST compensation period and the cut in Revenue Deficit Grant. The decision to adjust the “off-budget” borrowing (OBB) by KIIFB and the Kerala Social Security Pension Company (KSSPL) is highly discriminatory. The time for launching a massive protest against such discrimination has come. And all parties, irrespective of political differences, must make a united effort to force the Union Government to mend its discriminatory ways and practices. (IPA Service)