Kerala budget chooses fiscal thrift over profligacy

TheKerala budget for 2023-24signals that the state is changing its approach from profligate spending to . Whether or not it is forced by the Union Government and the CAGs stand on off budget financing through KIIFB, it is a welcome change as the previous path was taking the state towards a fiscal crisis that would have badly affected future generations.

The new approach to budget making shows respect for fiscal discipline.
The finance minister has focused on raising revenues through a slew of tax

hikes and expenditure rationalization. The Fiscal Deficit is projected to come down to 3. 5% of state GDP as per the cap set by the Finance Commission. But it is disappointing to see the revenue defi citcreep up from 1. 96% of state GDP to 2. 1%. It means that, in spite of the revenue gains from tax hikes, the state continues to prioritise short term spending over investments.

While there are funds allocated in a number of important areas, it is of concern that the Education budget has fallen by a massive 30% from Rs 2,546 crore allocated last year to Rs 1,773 crore in this budget. At a time when there are reports of exodus of students from the state, lower funds for education is the last thing we need. Presumably this is because of a cut in the centrally sponsored component of the education budget, but nevertheless the government has to take imaginative action to revitalize the higher Education sector in particular and that too with limited funds.