T.M. Thomas Isaac must have presented his most difficult budget, if not the worst, since donning the mantle of Finance Minister spread over two terms.
This is perhaps for the first time that he has had to resort to mobilisation of additional resources through taxation measures and tweaking non-tax revenue.
It was well known that the flood cess was coming ever since it got the clearance from the GST Council, but the impact of the hike will be directly on the consumers since a majority of commodities in Kerala come under the 18% GST slab. Along with the flood cess, the decision to hike the existing fair value of land by 10% is likely to create a lot of heartburn.
Apart from targeting additional revenue mobilisation of ₹1,785 crore through tax and non-tax mobilisation measures, the Minister has pinned his hopes on achieving an ambitious 30% increase in tax collection from the current 10% in order to help him contain the fiscal deficit to 3% from an average of 3.61% over the last five years and revenue deficit to below 1% from the five year average of 2.21%.
Dr. Isaac hopes a large inflow from settling of pending assessment cases under the previous VAT regime and recouping a large portion of GST loss by July when the annual returns start coming in.
Additionally, the Minister appears to have kept the yield from the flood cess deliberately at ₹600 crore, though the collection is likely to be higher considering the nature of goods coming under the tax slabs. Dr. Isaac is likely to come under fire for ignoring the productive sectors, something which the Opposition leaders pointed out.
There was lot of expectation that a special package to revive productive sectors would be announced. Agriculture and Irrigation, for example, have not got the kind of allocation which the Ministers handling these portfolios would have wished to tackle flood damages.
The Minister has also resorted to using the KIIFB route this year also to keep several projects out of the purview of budget provisions. Dr. Isaac had come in for criticism last year as well.
The onus would be on him to come out with the details of projects that have been delivered under KIIFB funding in order to retain credibility of his proposals, particularly the 25 projects for a new Kerala.