Kerala Budget: Alcohol Prices, Electricity Tariff To Go Up

A cash-strapped Kerala government on Monday increased court fees and excise duty on liquor and pitched for public-private funding in key areas to raise funds for the implementation of various developmental projects in the state budget for the fiscal 2024-25.

While the Congress-led UDF and the BJP claimed that there are no solutions proposed for the state’s financial problems, the Left government said that the budget sketches out a strong initiative towards overcoming the challenges and adversities Kerala is facing.

Finance Minister KN Balagopal tabled the fourth budget of the second Pinarayi Vijayan government without hiding its financial constraints, while attacking the Centre for the alleged neglect it shows towards the state.

Mr Vijayan, who praised the budget, said in a statement later that despite facing a hostile approach from the union government, the budget outlines resolute measures aimed at the rapid modernisation of Kerala.

In the budget, despite expectations, the government opted not to enhance social welfare pensions and also provided only a nominal increase of Rs 10 in the minimum support price for rubber — a major cash crop of the state — enhancing it to Rs 180 from Rs 170 earlier.

These aspects came in for criticism from Leader of Opposition (LoP) in the state assembly VD Satheesan and BJP state chief K Surendran, who termed the meagre hike in rubber support price a “joke”.

During the budget presentation, Mr Balagopal attributed the nominal raise in MSP to the financial limitations of the state and the Centre’s refusal to accept its request to hike the price to Rs 250.

The minister also proposed a hike of Rs 10 per litre in excise duty on Indian-made foreign liquor (IMFL) and an increase of 15 paise per unit in electricity duty for consumers who generate and consume energy for their own consumption.

The minister justified the additional cost to the consumer saying there was a need to raise additional revenue as the Centre has allegedly put restraints on the state’s borrowing capacity and cut down on its central allocations.

The state hopes to generate additional revenue of Rs 224 crore through these measures, the Finance Minister said. However, he later clarified that the levying of the gallonage fee on IMFL sale would not be passed on to consumers.

Finding other ways to raise the government’s receipts, which is around Rs 27,846 crore less than its proposed expenditure for the coming fiscal, the Finance Minister said suitable amendments would be made to The Kerala Court Fees and Suits Valuation Act, 1959 whereby it would earn an additional Rs 50 crore.

Referring to the revenue deficit of Rs 27,846 crore, LoP Satheesan, while speaking to the media after the presentation of the budget, said it indicates that the financial situation in the state would continue to be critical.

The Finance Minister, however, came out with elaborate plans for raising funds, which included revising stamp duty slabs for lease deeds, resuming sand removal in rivers across the state and disposing of unusable assets piled up in various government departments, to bring in around Rs 440 crore annually.

Indicating a clear policy diversion from the proclaimed anti-privatisation stand of the Left government, the budget also pitched for tapping the possibility of private investments in many key sectors with the minister promising to bring investments worth Rs three lakh crore to the state in the next three years.

Opportunities for establishing foreign university campuses will also be examined and steps will be taken to establish private universities as well, the FM said.

Permission would be given to set up 25 new private investment parks in the state in the coming year, he said, adding that private participation in developing local tourism centres would also be encouraged.

Special Development Zones will be created in partnership with the private sector by attracting investment from institutions and individuals, including non-resident Keralites, he added.

For the smooth and time-bound execution of major projects such as Vizhinjam Port, Cochin Metro and Kannur Airport, a sum of Rs 300.73 crore has been earmarked.

Referring to the development of the Vizhinjam port, Balagopal said large-scale investments need to be channelled in to transform it into an entity capable of competing with other prominent ports around the world.

“This can be made possible only through a combination of public funding, public-private partnerships as well as private sector investment,” he explained.

While the traditional agricultural sector received an allocation of Rs 1,698.30 crore in the budget, the cooperative sector, which has been mired in controversies recently, was given a share of Rs 134.42 crore.

“The tourism sector is growing. Allocating Rs 351 crore for it in fiscal 2024-25,” the minister said, adding that investments worth Rs 5,000 crore would be attracted to the sector.

Other major allocations include: Life housing scheme (Rs 1,132 crore), IT (Rs 507.14 crore), Science, Technology and Environment (235.55 crore) and so on.

The minister emphasised that “Kerala is on the cusp of becoming a ‘sunrise’ economy (one that shows prospects of a rapid boom). The sunrise sectors are defined by futuristic strides in technology, an exponential rise in demand and the resultant economic development.” Mr Balagopal also said that Kerala will not remain a mute spectator against the Centre’s hostile approach and would march forward with the strong sentiment of ‘Thakarilla Keralam, Thalarilla Keralam, Thakarkkanavilla Keralathe (Kerala will not be shattered, Kerala will not tire, Kerala cannot be destroyed)’.

Meanwhile, a traders’ body said the budget contained no stimulus package for small-scale businesses and that the amnesty scheme announced by the government was only partially beneficial.

On the other hand, the Kerala Startup Mission (KSUM) and the industry sector welcomed the state budget and said it reflects a shift towards encouraging the manufacturing sector and startups with a high focus on private investments in key Sunrise sectors.