Left turns Rigt, budget opens door wider for private sector

Thiruvananthapuram : At a time when the State has been passing through the worst-ever financial choppy patches, it was generally expected that Finance Minister K N Balagopal would take steps to navigate the State into a placid shore on the State budget 2024-25 that he presented in State Assembly on Monday. Unfortunately, it seems that the minister is a little confused over the strategies to be adopted to bail out the State from the present state of affairs.

The budget is an indication that the second Pinarayi Vijayan government is keen to retain the present system and at the same time it wants to lure private funds into the State. The government is not ready to make structural changes to get rid of loss-making state-owned public sector units which have been a big liability for the State exchequer for the past several years. Moreover, he made budgetary allocations to PSUs like KSIDC and Kannur International Airport Ltd which will have to be financially self-run entities. Balagopal also said that the State is planning to introduce a new pension system replacing the contributory pension scheme that is in place now.

If the Centre continues to restrict its share to the State, the State will go for a ``B plan’’ to overcome the impediment resulting from it, he announced

Indicating a shift from the government policy, the budget says that the government would open doors more widely for the private sector, especially for higher education, information technology, health, tourism, and sports.

Notably, the government is rolling out the red carpet for foreign universities and private universities. Balagopal said that foreign universities will be allowed to open their campuses in the State while the private sector will set up universities in the State.

The minister said that the government is planning to develop mega industrial centers around the Vizhinjam port, which according to him to be commissioned in May, and Kochi port tapping opportunities triggered by them.

From his words, it has to be construed that the government will in the future depend much on the Vizhinjam port for attracting investment and creating jobs in the State.

He said that 25 industrial parks will come up in private sector.  

The budget has set aside nearly 3500 crore for the construction sector including Rs 1500 crore for Life mission project. Balagopal expects that India too may face a recession and the allocation will help the State overcome in the event of such a situation.

The budget expects an investment of Rs 5000 crore in the tourism sector, mainly from the private sector. The budget offers a 2 per cent interest subsidy for the investment.

The budget claims the State will attract investment of Rs 3 lakh crore in two years, but the minister did not go into the details.

To mobile additional resources, Balagopal has decided to hike the fair value of land and to bring the flat owners under the purview of the land tax. He has made a substantial increase in the court fees. The excise duty on Indian Made Foreign Liquor (IMFL) by Rs 10 per liter. The excise duty on power generated for own consumption has been increased by 10 per cent. It is envisaged that from these steps, an additional fund of Rs 1706 could be raised.

However, the opposition and public finance analysts are of the view that the additionally mobilized fund of Rs 1706 crore does not have much effect of the fiscal deficit that stands at 47000 crore.

Balagopal envisages a revenue of Rs 1.38 lakh crore, an expenditure of Rs 1.45 lakh crore, and a deficit of Rs 27846 crore in his budget for 2024-25