By D Dhanuraj with Ananthitha Anandan

You cannot expect anything short of a ‘magical populist budget’ from a two-term ‘Finance Minister’, especially when presenting his last budget supposedly. Therefore, it was not entirely surprising when Dr Thomas Issac presented Kerala State budget for the poll year 2021-2022. The final segment of the 200 minute-long budget speech was curtailed for the lack of the time, to the government’s benefit, as it helped to avoid a debate on the resources required to meet the announcements made by him.

Some of the fundamental issues which remain unaddressed in the Kerala budgets presented from time to time are as follows:

  1. Irrespective of whether it is the Left (LDF) or the Right (UDF) in power, the competition has always been for more job creation and welfare schemes by the State Government.
  2. The Public Finance Management (PFM), i.e., how much and where to spend the money and for what reasons, is not adequately examined and explained.
  3. For the last two decades, PFM discussions are confined to the binary game of borrowings and debts.
  4. The opposition parties often accuse the government of its poor fiscal discipline management and more often for accruing debt over the years to the State’s balance sheet.
  5. No one dares to challenge the conventional wisdom of the increasing extravaganza of the welfare programmes and schemes in the budget, regardless of whether the source of additional income is detailed in or not.
  6. The way the State is mobilising and mopping up its resources is also lost in the oblivion in political debates and comparisons with the previous governments.

The net result is that the budget speech turns out to be a policy talk rather than a financial account summary for the State.

However, the Kerala Budget 2021 was all the more disappointing as the Finance Minister in his wordy budget speech brought to light the confused State of the political leadership. The following are some mentions in the budget speech, which reflect the level of confusion of the Finance Minister.

  1. The announcement of the creation of 8 lakh jobs completely ignored the role of the private sector in generating job opportunities, giving the impression that the jobs are created purely by the State government.
  2. However, skill training and higher education revamp are proposed to meet the global market and job avenues’ requirements. Along the same lines, the Finance Minister mentioned that a US multinational has opened its campus in Technopark in Thiruvananthapuram and added that knowledge economy is the future and Industrial Revolution 4.0 is what the State has to tap into, but there is no mention of the private or foreign universities in ‘God’s Own Country’.
  3. While he acknowledges the global market’s role in developing our State to an educational hub, he willfully ignores the role of the market in other aspects of development. The simplest examples being his strong opposition against privatisation of KSRTC and PSUs.
  4. A Post-Doctoral Fellowship programme was announced, and the understanding is that anyone could apply for the fellowship. Obviously, this also poses the question of the benefit that Kerala is looking for from such fellows from across the world if the government, through its policies, is not ready to embrace the global knowledge-making industry and Industrial Revolution 4.0 from its education, industry and market linkages.
  5. There is also a proposal to redeploy Gulf returnees in the local economy while sending them back with renewed skillsets is also mentioned. Here, clarity is required whether the government promotes the locals to get trained in the skills necessary for the global knowledge industry and migrate or encourage value chains to come to Kerala to set up their businesses.
  6. Since the budget speech has not touched upon the private sector (except duty waive off to the new industry), it is unclear whether there is any strategy to attract and retain talents within the State itself. Unless the government is open to transfer of knowledge, human resources and the capital, the announcements in the higher education, knowledge economy and skill training will remain on paper as Sarkari benevolence.

Kerala is on a tipping point of transformation. Hence, mixed messaging is not as good as mixed economy debates. A growing interest among the citizens in the budget and its provisions is the need of the hour to bring about a paradigm shift in the sad State of affairs. The citizens’ rights to understand the provisions in the budget and their impact on them are lost in the TV room discussions, where everything gets politicised. The Fiscal Responsibility and Budget Management (FRBM) technical framework needs to be expanded to debate the guidelines to be mandated for the efficient and effective utilisation of public finance. Kerala has to get rid of the paternal state attitude. Lack of clarity on the intended policies and their whereabouts will not benefit the State and the people. The political leadership should make its position clear through consistent policy messages.

Views expressed by the authors are personal and need not reflect or represent the views of Centre for Public Policy Research. 

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