Kerala budget: Liquor, fuel to cost more in Kerala; Vehicle tax, land fair price value to go up

Thiruvananthapuram: Petrol, diesel and liquor are to cost more and motor vehicle tax and fair price value of land to go up in Kerala as the state government acted tough to mobilise additional revenue to carry forward their social security schemes and development programmes in the budget presented here on Friday.

Despite wide expectations, the social security pension received no hike but Finance Minister K N Balagopal, while presenting the budget for the fiscal 2023-24, assured that the financial constraints would not impact the welfare schemes of the Left government.

He did not mince allocations in the health and education sectors amid cash crunch which received an outlay of Rs 2,828.33 crore and Rs 1,773.09 crore respectively.

The FM said it is proposed to levy a Social Security Cess on Indian Made Foreign Liquor (IMFL) and on the sale of petrol and diesel as the commitment to continue protecting the decent lives to vulnerable sections of society require supplementing the financial resources.

"It is proposed to levy a Social Security Cess at the rate of Rs 20 for each bottle of IMFL having MRP between Rs 500 and Rs 999 and at the rate of Rs 40 per bottle of IMFL having MRP above Rs 1,000," Balagopal explained.

An additional revenue of Rs 400 crore is expected through this, he said.

Another impetus measure towards the Social Security Seed Fund is proposed to be brought by bringing the Social Security Cess on sale of petrol and diesel at the rate of Rs two per litre, he added.

"This is expected to bring in additional revenue of Rs 750 crore to the Social Security Seed Fund," he said.

The existing fair value of land would be increased by 20 per cent to bridge the gap between market value and fair value, the FM said.

The one-time tax on newly purchased motorcycles having purchase value up to Rs 2 lakh is enhanced by 2 per cent, he said adding that an additional income of Rs 92 crore is expected through this.

However, a one-time tax on electric motor cabs and electric tourist motor cabs reduced to 5 percent of the purchase value to minimise air pollution and to promote public transport, the minister added.

Balagopal, in his budget, allocated Rs 100 crore for welfare programmes and set aside Rs 2,000 crore for tackling price rise, besides announcing a slew of initiatives for the infrastructure and higher education sector.

"An amount of Rs 2,000 crore is earmarked for 2023-2024 to continue vigorous market interventions, considering that the threat of inflation has not completely abated", the FM said.

Beginning the budget speech on a positive note, Balagopal said the southern state has bravely overcome COVID challenges and finally returned to the path of growth and prosperity.

Though the state's economy is facing challenges due to the financial policies of the Centre and its decision to impose cuts on its borrowing limit, Kerala is not in a debt trap, he said.

The opposition Congress-led UDF slammed the Kerala budget protesting against the proposal for a cess on petrol, diesel and liquor. It accused the Left government of looting people.

"The budget is hiding the critical financial situation faced by the state government and the proposals amount to looting the people. The decision to impose cess on liquor will lead to more people shifting towards drugs. The budget was presented without doing adequate studies," Leader of Opposition V D Satheesan said.

He said when the state was facing inflation, the rise in petrol and diesel prices would adversely affect the market.

"The imposition of cess on petrol and diesel comes at a time when we are fighting against soaring fuel prices. This will lead to price rise of essential commodities affecting the common man," Satheesan said.

In his budget speech, Balagopal accused the Centre of bringing change in fiscal federalism, saying it goes against the spirit of the constitution.

"Centralisation of power and disregard for states, especially Kerala have increased unprecedentedly", the minister said.

He alleged that Kerala is being sidelined in the allocation of centrally sponsored schemes also.

"Can anyone with commitment to the people of Kerala justify this situation? On whose side do those who celebrate this disregard stand?" the minister asked.

Slamming the Centre, he said as a result of the cessation of GST compensation, there has been a shortfall of around Rs 7000 crore during the current fiscal.

"As a result of the policy of the Union Government treating Public Account as debt liability, there is a revenue loss of around Rs 10,000 crore per annum", the minister said.

Balagoapl said during the tenure of the Tenth Finance Commission, the share of Kerala was 3.875 per cent of the divisible pool to be distributed among the states.

"By the time of the Fifteenth Finance Commission, it came down to 1.925 per cent. Through this, the Union Government cut down the revenue of Kerala by tens of thousands of crores", he said.

He also said there is a shortfall of around Rs 6,700 crore due to the reduction of the Revenue Deficit Grant by the Union Government.

Referring to the financial crisis in developed countries like Britain and neighbouring Sri Lanka and Pakistan, Balagopal said this peculiar situation can be survived only by taking every single step forward carefully.

"As a matter of pride that Kerala is able to move forward with alternative welfare policies despite this global scenario," Balagopal said, and urged the legislators to set aside all our differences beyond party politics and stand united for the state.