Finance Minister K.N. Balagopal’s 2024-25 Budget will be keenly watched for strategies aimed at mopping up additional resources while maintaining, in the face of financial constraints, the pace on social welfare and development programmes of the Left Democratic Front (LDF) government.
Mr. Balagopal is scheduled to present the Budget in the Assembly on Monday.
As Mr. Balagopal had announced a string of tax increases and cesses in his previous Budget, the general feeling is that he has limited room to manoeuvre on that count this time. In the run-up to the Budget, the government had formed a high-level panel to study “innovative measures” for raising additional resources.
Spending some time with the media on Saturday evening, Mr. Balagopal hinted at measures designed for revenue growth but said care would be shown not to overburden the people.
The Budget will generate much interest with regard to the government’s plans for the social security pensions and the fate of the cesses on Indian-Made Foreign Liquor, petrol and diesel announced in the 2023-24 Budget to aid these pension payments.
The LDF government had drawn considerable flak over delays in making the payments during the past year. More recently, Mr. Balagopal informed the Assembly that the cesses had yielded only ₹139.92 crore from IMFL and ₹600.78 crore from petrol and diesel, which were insufficient to fund even one month’s payments.
In many ways, the Minister faces challenges similar to those he faced ahead of the 2023-24 Budget. The LDF government has consistently accused the Union government of unfairly depriving it of ₹ 57,000 crore annually. These issues are expected to persist in 2024-25 as well.
In a written reply in the Assembly last week, Mr. Balagopal succinctly described Kerala’s fiscal dilemma from the government standpoint: “The massive reduction in revenue inflow (from the Centre) cannot simply be made up by increasing the State’s own revenue. At the same time, it would be impractical to whittle down spending to match this reduction.”
On the bright side, the trends on State’s own tax and non-tax revenues have been encouraging. Own Tax Revenue rose from ₹58,340.52 crore in 2021-22 to ₹71,968 crore in 2022-23. It is projected to rise to ₹81,038.77 crore (budget estimates) in 2023-24. Own non-tax revenue rose from ₹8,978.42 crore in 2021-22 to ₹13,297.05 crore in 2022-23. It was projected to grow by 8.05% to ₹14,367.12 crore in 2023-24.
The Economic Review, which reported a 6.6% economic growth in 2022-23, observed that in addressing the current economic stagnation, the State recognises the necessity for a pragmatic approach and innovative fiscal strategies for resource mobilisation. This, it said, involves “optimising the efficiency of raising State-owned resources, ensuring justifiable central receipts, and rationalising expenditures”.
The Medium term Fiscal Policy tabled along with the 2023-24 Budget had observed that “the growth momentum” was expected to sustain during 2024-25 and 2025-26.
