State’s first post-flood budget to be presented on Jan 31

Thiruvananthapuram: The budget session of the state assembly will begin on January 25 and the state budget will be presented on January 31. The state cabinet on Wednesday decided to recommend the governor to convene session.
The state budget this year will focus specially on rebuilding the flood-hit state. Finance minister T M Thomas Isaac has already made it clear that the budget would be giving thrust to various schemes aimed at rebuilding Kerala. Isaac has begun preparing the budget t the temporary office set up at the Government Guest House, Vizhinjam where he had prepared the previous two budgets as well.

The 1% calamity cess over GST on selected products for two years will be a solace for the finance minister who is hoping to mobilize Rs 500 crore through this a year. Even though the GST council has approved the calamity cess, the choice of the goods on which the cess would be imposed will be finalized by the state government.

With expenditure increasing, compared to revenue, the fiscal position of the state is currently not safe. Sources in the finance department have said that certain tough measures, like freezing of new post-creation, will have to implemented to tackle this situation.

Even though the state’s growth rate has shown an impressive trend, the government is facing an uphill task since its borrowing limit has already been exhausted. Despite several requests from the state, the Centre is yet to give its consent for increasing the borrowing limit.

At present the average growth rate of the state is between 12% and 13%. The worrying factor is that in the last four years the major portion of the loans taken have been spent on revenue expenditure. Since loans should be utilized only for capital expenditure, the focus will have to be shifted on this, said sources in the finance department.

Another worrying factor is that the revenue share has not increased as expected after the roll out of GST. As per statistics, revenue has only increased by 10% to 12% after GST.

The announcement of new projects will only be under KIIFB in the budget as the state fiscal position does not allow the minister to come out with new projects at this time. So far, the claim is that projects worth over Rs 60,000 crore have been announced by KIIFB.