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Saturday, July 14, 2001



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Rs 448-cr deficit in Kerala budget -- Proposals to mobilise Rs 456.40-cr addl funds

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ADDITIONAL resource mobilisation proposals to mop up Rs 456.40 crore, enactment of a Private Sector Participation (PSP) Act, formation of an Industrial Growth Fund and a labour legislation to protect investors and households from unfair labour practices are some of the highlights of the revised Kerala budget for 2001-2002.

The first budget of the newly-elected United Democratic Front (UDF) Government, presented by the Finance Minister, Mr K. Sankaranarayanan, in the State Assembly on Friday, showed a net deficit of Rs 447.91 crore.

The Finance Minister, who termed the budget as a `corrective' one, has also pruned the Plan size to Rs 3,015 crore from the earlier estimate of Rs 3,600 crore.

The budget has pegged the revenue receipts at Rs 10,626.17 crore and the expenditure at Rs 12,991.26 crore, leaving a revenue deficit of Rs 2,365.09 crore. The capital expenditure has been projected at Rs 680 crore. After taking into account net loans an d advances, net public debt and net public account, the overall deficit is Rs 140.68 crore.

The year began with a negative opening cash balance of Rs 585.37 crore and the budget has proposed additional expenditure of Rs 178.26 crore. With the proposed additional resource mobilisation of Rs 456.40 crore, the final deficit stands at Rs 447.91 cro re.

The budget proposes levy of an additional sales tax of 15 per cent on the existing rates applicable to all goods, other than petroleum products and liquor, during the current year. The additional revenue on this account is put at Rs 225 crore.

A turnover tax of 1.5 per cent has been proposed for all goods, except petroleum products and those included in Schedule III of the KGST Act and Section 14 of the CST Act. This will be applicable to assessees having a turnover of Rs 30 lakh and above and the expected additional revenue from this measure is Rs 90 crore.

The rate of tax on foreign liquor has been raised from 85 to 90 per cent and that on beer and wine from 55 to 60 per cent. This will add Rs 74 crore to the revenue receipts.

The turnover tax on bar hotels will be raised to 10 per cent from the existing five per cent to net in an additional revenue of Rs 10 crore. Licence fee for bars will be enhanced from Rs 13 lakh to Rs 15 lakh to bring in an additional revenue of Rs 9.5 c rore.

The other additional resource proposals include revision in the compounded tax norms and rates for jewellery dealers (Rs 5 crore), four per cent sales tax on silk sarees (Rs 5 crore), commensurate compounded tax on granite crushing units (Rs 5 crore), fo ur per cent tax on branded bread and bun (Rs 5 crore) and a licence fee on distributors and dealers of lotteries (Rs 5 crore).

In line with the Government's thrust on the development of information technology industry in the State, the rate of tax on all goods included in the IT policy of the Centre will be reduced from eight per cent to four per cent. This will entail a loss of Rs 5 crore to the Government.

The proposed Private Sector Participation (PSP) Act is meant to ensure flow of increased private capital for the development of public infrastructure as also for the industrial growth of the State. The Act will provide a framework for taking up projects on build-operate (BO) and build-operate-transfer (BOT) basis.

The Industrial Growth Fund will be set up through mobilisation of resources from non-resident Keralites. It will be managed by financial institutions to ensure that the funds are used only for capital investment. To begin with, the fund will be made avai lable for financing private sector investments in the State for restructuring loss-making public sector units.

A major objective of the proposed labour legislation is to make Kerala an investor-friendly State by dispelling the feeling of insecurity perceived by many potential investors. As a prelude, the Government will prepare a comprehensive labour policy withi n six months.

A notable feature of the budget is the allocation of special development fund of Rs 25 lakh each to MLAs for taking up developmental activities in their respective constituencies. The budget has set apart an amount of Rs 35 crore for the purpose.

The Government has recognised information and communications technology as a vital element for the economic development of Kerala. An amount of Rs 41.95 crore has been allocated to this sector in the budget.

The tourism sector, another thrust area, gets an allocation of Rs 39.66 crore under the annual Plan. The Government has laid emphasis on attracting private capital for the development of tourism destinations in the State.

The budget has maintained the share of resources to the local self-governments by earmarking an amount of Rs 1,237.50 crore.

For the energy sector, the budget has made an allocation of Rs 509 crore under the annual Plan. The major focus will be on enhancing the capacity in the generation sector by making use of the hydel potential of the State with an allocation of Rs 44.95 cr ore. During the current year, installed capacity to the tune of 211.2 MW will be added to the State grid. This apart, the transmission system will be strengthened with a planned investment of Rs 223 crore and the distribution will be improved at an outla y of Rs 115.03 crore.

For industries, the budget allocation has been pegged at Rs 218.40 crore under Plan. The proposals include establishment of an `industrial corridor' in the Kochi area and setting up of `special industrial zones' in the State.

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