Kerala tables farm-leaning budget; cars get expensive

Written by M Sarita Varma | Thiruvananthapuram | Updated: Mar 20 2012, 07:02am hrs
Kerala finance minister KM Mani on Monday presented a farm-leaning, infrastructure-oriented budget for 2012-2013, slapping higher road tax on cars and higher VAT on plastic carry bags. While, earmarking funds for new airports, bullet-trains and seaplane units, Kerala has also set aside a modest R50 crore to build a new dam to replace the 117-year old Mullaperiyar dam, over which it is locked in a legal battle with Tamil Nadu. At R1,05,000 crore, the plan outlay for 2012-2013 is 16.6% higher than that of the previous year.

The State Budget, with a deficit of R289.25 crore, has also softened the household kitchen bill, downpegging taxes on essential food items like lentils, coriander and maida flour and cooking oil. The VAT slabs have been jacked up from 4-12.5% to 5-13.5%. Plastic carrybag is to get a 20% tax tag, while cloth carry bag will be tax-free. Tax on cigarette will be 15% and those on other tobacco products 22%. Tax on stents and valves for heart surgery, cradles and medicines brought from hospitals have been softened.

"The dynamics of my budget is set on the realisation that infrastructure is the only engine for economic development," says Mani, as he presented his tenth Budget in the Kerala Assembly. The State Finance Minister shared optimism of "posting double-digit growth in the current financial year" though the official growth rate target is set at 9.5% .

The Congress-led UDF Government's infrastructure spending spins around R50 crore for the initial expenditure in the R45,000-crore Phase I of State's ambitious PPP-model highspeed rail corridor from Kasargode to Thiruvananthapuram, R150 crore for Kochi Metro rail, R20 crore each for initial spend on Monorail in Thiruvanantapuram and Kozhikode cities and R224 crore for Vizhinjam Deepsea terminal. In addition, the State Government has also proposed a seaplane company for easing traffic issues, airports in Idukky and Wayanad districts and airstrips in each district. The mobility infrastructure-building is expected to push tourism, which is now the driving force of State's high-performing service sector.

Prof B Alwin Prakash, University of Kerala, says that the firm infrastructure bearings of the budget would be effective in tempting some of Kerala's 20 lakh NRI diaspora to invest in the industrial sector in the State. "New airports and new airstrips are no luxuries, in the changing global scenaria. The State's economy had taken a quantum jump after the development of three international airports. One, the new airports would buoy tourism in Kerala's tourist spots. Two, they would herald investment from entreprenurs, who are seeking pre-developed industrial areas," says Prof Prakash. The Opposition LDF, meanwhile, is on warpath over Mani's proposal to raise the retirement age of State Government employees from 55 to 56 years.