Additional revenue mobilisation to contain the deficit at 4% during the pandemic will be biggest challenge for Finance Minister K.N. Balagopal while presenting his maiden Budget (revised Budget) for 2021-22 in the Assembly on June 4.
As the Finance Minister has to carry forward the Left Democratic Front (LDF)’s goal for a knowledge-based society with strides in modern employment opportunities and industrial growth and consolidate the achievements made in the social sector, the challenge is to tap new revenue sources.
While implementing futuristic budget, Mr. Balagopal’s hands will be tied as the situation that prevailed in January is different now. To begin with, there will be a sharp fall in Goods and Service Tax (GST) revenue and GST compensation shortfall is still a mirage for a consumer State like Kerala. Many unexpected expenditure such as natural disasters and COVID vaccine bill will put pressure on the Finance Minister.
The revenue shortfall, ₹8,000 crore to ₹10,000 crore, was more than the anticipated as the economic crisis triggered by the second wave of the pandemic had come after the Budget was presented by former Finance Minister T.M. Isaac on January 15, official sources said. The 2020-2021 Budget of Dr. Isaac had provided additional expenditures of ₹1,164 crore and tax concessions of ₹191 crore against additional revenue mobilisation of just ₹200 crore, leaving a cumulative deficit of ₹1,306.69 crore.
Kerala received only ₹5,700 crore last fiscal as GST compensation from the ₹1.10 lakh disbursed by the Centre as GST compensation to all States.
The cushioning impact for Mr. Balagopal is the ₹19,524 crore Revenue Deficit Grant provided by the 15th Finance Commission for 2021-2022.
Property tax is one area which is being eyed for mobilising revenue. Raising the property tax from the present 0.5 of the GDP to 1% will alone fetch ₹8,000 crore. At present, sources said property tax collection hovers around ₹1,000 crore with urban bodies contributing ₹400 crore.
In the non-tax revenue, the below 5% receipts in the education and health sectors calls for remedial steps. Making the affordable to pay, offering good service and periodic revision would bring funds to the treasury, sources said.
