The development of infrastructure has been a ‘mantra’ in both central and state budgets for a number of years. Kerala is an immediate member in the group giving thrust to infrastructure development due to limited land area, high density of population, and lack of political consensus, etc.
The recent emphasis given to this sector has produced some positive results on the state economy. Vizhinjam port, Kannur airport, Vyttila-Kundanoor flyovers in Ernakulam, and many state highways and by-passes, to name a few. Infrastructure achievements were possible by setting up of Kerala Infrastructure Investment Fund Board (KIIFB), the government’s agency for financing infrastructure projects in the state.
While the previous budget fixed the expenses of KIIFB at Rs 20,000 crore, the present one has made an allocation of Rs 15,000 crore. The government claims that projects worth Rs 60,000 crore are in pipeline. The inference from the budget is that the percentage of ongoing projects is hardly 50% of it.
The current budget proposes to finance infrastructure development for schools, universities, IT parks, pharmaceuticals, tourism, fisheries and industrial sectors with KIIFB support. Outside KIIFB, the allocation is made to PWD for road construction. The budget reveals that 25% of road construction done by PWD during current year is financed by KIIFB and the rest with budget allocation to construct 11,580km new roads.
By broader definition of infrastructure, accommodating basic systems and services that state needs for proper functioning, there are measures in the budget. Announcements for setting up SHGs to promote agricultural development is an example; as a result of which human development is linked with physical development. A reflection of human development is the infrastructure development in schools through smart class rooms and the like.
Kochi benefitted from key announcements. The metro extension project, pharma park, research centre in Ayurveda college, new KSTRC stand, etc, are a few. The industrial corridor from Kochi to Palakkad will be a milestone for the manufacturing sector in Kerala. However, allocation for second phase of Vyttila hub is a serious missing. There could have been more emphasis on the installation and operation of rooftop solar.
Finally, the budget seems to be silent in making creative suggestions to reduce lag in implementation. The criticism leveled against KIIFB by the opposition is that only projects worth Rs 6,000 crore were completed. It means that 10% of the allocation made so far is translated into reality, an indication of implementation lag in the projects.
This article is written by Dr Martin Patrick, Chief Economist of CPPR was published in The Times of India on 16 January 2021, click here to read
Views expressed are personal and need not reflect or represent the views of Centre for Public Policy Research.
Dr Martin Patrick is Chief Economist at CPPR. He holds a PhD in Applied Economics from the Cochin University of Science and Technology (CUSAT), Kochi and also had a post-doctoral training at Tilburg University, Netherlands. Presently, he is a Visiting Fellow at Indian Maritime Institute, and Xavier Institute of Management and Entrepreneurship, Ernakulam.