Will figure out Plan B if neglect continues: Kerala FM takes on Centre

Kerala Finance Minister KN Balagopal has garnered attention for alluding to a ‘Plan B’ to address the perceived neglect by the Union government in the allocation of funds and projects to the state in the recent Union Interim Budget.

This ‘Plan B’, which the minister mentioned in his budget speech on Monday (February 5), has become a focal point, particularly in light of discussions surrounding the Vizhinjam seaport project of the Adani Group, which has sparked significant debate and interest.

The key proposals of the budget included the introduction of a new ‘assured’ pension scheme to address concerns raised by employees regarding the NPS, efforts to attract private and foreign universities to Kerala to stem the outflow of students seeking higher education abroad, and a hike in liquor prices.

While the treasury benches cheered the bold approach taken by the government amid the alleged step-motherly treatment from the Union government, the Opposition flayed them for using the budget document for making political criticism and announcements.

Legal battle

“This neglect towards Kerala reached its zenith during the current fiscal (2023-24). We remain hopeful that the legal battle in the Hon’ble Supreme Court and the political agitation outside the court will improve matters. Also, some experts predict that the Centre will soften its stand after the Lok Sabha elections. This Budget is being prepared, hoping that things will get better. On the contrary, what if the Central government takes measures to centralise the fiscal system? What if the neglect towards Kerala continues? In such a situation, we will have to figure out a ‘Plan B’. We are not ready to make any cuts in the benefits provided by the state to its people. There is no turning back at this stage on development activities either,” stated Balagopal in his budget speech.

The minister started the budget speech with optimism and a vision for growth and development in the state, emphasising “the pertinent belief that Kerala is on the cusp of becoming a sunrise economy”.

“The sunrise sectors are defined by futuristic strides in technology, an exponential rise in demand, and the resultant economic development. This is unlike the sunset sectors which have declining demand and are driven by technologies that are destined for obsolescence. No society can advance in the present day without actively encouraging the transition from these sunset sectors to sunrise sectors. In this process of continuous evolution, Kerala's position is at the forefront among Indian states. Our achievements consistently disappoint the nay-sayers who portray our state as a lost cause,” he said.

Private investment

The budget has stressed private investment primarily in education, tourism, and industrial sectors, with plans to ensure investment of Rs 3 lakh crore over the next three years.

In a budget that put the Vizhinjam port at the centre stage, the LDF government has been relying on private investment and public-private partnerships like never before. The state has high expectations from the Vizhinjam international seaport, which is anticipated to be operational by May. “We must not forget the delay of at least two decades in the case of Vizhinjam Port, which is expected to redefine the commercial map of South India. The government is currently coordinating the activities with strong determination that there shall not be any further delay,” stated the minister.

In addition to public sector investment and subsidy schemes, the government envisages new generation investment models like public-private partnerships, joint ventures, CIAL model companies, Infrastructure Investment Trust (InvIT), Real Estate Investment Trusts (REIT), Hybrid Annuity Model (HAM).

“To resolve the issue of land scarcity, there will be reforms which ensure speedy issuance of sanctions, without compromising conservation of the climate and environment. An expert committee will be constituted to study these matters and submit a report within three months, based on which further action will be taken,” said the finance minister in his budget speech.

Development zones

Kerala plans to embrace the concept of development zones, inspired by those initiated in China during the late 1970s. These Special Development Zones (SDZs) aim to maximize the developmental opportunities offered by Vizhinjam. The government intends to collaborate with the private sector to establish these zones and attract investments from various sources, including institutions, individuals, and non-resident Keralites.

To attract private and foreign universities to Kerala, the government is taking several initiatives, including the formulation of a higher education investment policy, the establishment of a single-window clearance facility, and holding regional conclaves in Europe, USA, Singapore, and Gulf countries. These efforts aim to create a conducive environment for investment and collaboration in the education sector, thereby enhancing Kerala's position as an attractive destination for higher education institutions.

“Higher Education Transformation Initiative Global Conclave will be conducted in the state in August 2024. Kerala State Higher Education Council will be entrusted with this responsibility. The objectives of this initiative include the formulation of a higher education investment policy. This policy will also include special incentives and packages to attract investments for establishing new higher education institutions in Kerala having international standards in partnership with reputed national and international educational institutions,” reads the budget speech.

‘Misleading public’

Meanwhile, the ruling LDF MLAs praised the budget, describing it as bold. The finance minister's declaration that the government would continue to support welfare schemes and even increase the minimum support price of rubber, despite facing financial constraints and alleged bias by the Union government, was applauded.

On the other hand, Opposition leader VD Satheesan alleged that the budget was diminished to a platform for political announcements and criticism directed at the Opposition.

“The budget appears to have been crafted to mislead the public and lacks adequate financial backing. It is disappointing for the agriculture sector, which is evident in the mere Rs 10 increase in the rubber support price despite the sector's ongoing crisis.”

He also raised concerns about the public’s confidence in this year’s budget, noting that the government has only utilised around 55 per cent of the planned expenditure for the current financial year, which is nearing its end in a couple of months.