The State Budget for 2020-21 offers a panacea to the undue thrust laid on supply side economics in the Union Budget and makes an attempt to wriggle out of the crisis triggered by the shortfall in Central allocations.
Finance Minister T.M. Thomas Isaac who launched a broadside against the Central bid to rock the pillars of fiscal federalism and the alleged unconcern for the fiscal woes of State governments reiterated the plan to boost capital expenditure in turbulent times to catalyse the economy and also cushion the impact of economic slowdown.
Political line
This is pursuant of the political line that a slowdown could be effectively contained only by reviving and increasing the spending capacity of the people which was expropriated by demonetisation.
The Budget strongly criticised the Central decision against whittling down the allocation for schemes such as the Mahatma Gandhi National Rural Employment Guarantee Scheme that would have put money into the hands of the rural poor to boost spending.
The Budget also came out against the Central perception which held that the reason for the economic crisis was not lack of demand but problems in the supply side. The reluctance to provide housing and consumable loans at affordable rates is being drawn up against the Centre’s enthusiasm to dole out tax cuts to corporates, acceleration of privatisation and the anti-labour reforms being pushed vigorously.
The State Budget seeks to counter such policies with proposals to enhance the welfare pensions using the available fiscal leeway, opening of 1,000 outlets to provide meals at ₹25 and taking up schemes river revival to provide maximum employment to the rural poor.
People’s Plan
Dr. Isaac has also given due importance for the People’s Plan Campaign that was moulded under his tutelage as State Planning Board member in the late ’90s. The campaign would come under review in this silver jubilee year and the government would opt for a course correction, if needed.
This is in spite of the fact that the Kerala model in decentralised planning and governance had won accolades and is being touted as a successful one.
Completing the projects cleared by the Kerala Infrastructure Investment Fund Board is the challenge before the government and the Finance Minister has not shirked the responsibility in this regard either.
