Shaky funds and depleting revenues welcome new Kerala FM Balagopal
4 min read Express News Service
KOCHI: An enormous problem awaits Okay N Balagopal, the brand new Kerala finance minister, recognized for gentle manners however not scared to talk his thoughts on seemingly advanced financial points even when that meant contradicting his senior occasion colleague and economist-finance minister T M Thomas Isaac.
Balagopal, 58, assumes workplace at a time when the state’s funds are stretched to the restrict, hit by the Covid19-triggered financial slowdown, fall in remittances following the large influx of expatriates from the Gulf as a result of job losses and better funds outgo on mortgage curiosity funds and wage pay hike as beneficial by the eleventh pay fee. “Balagopal faces a daunting task as the state’s finances are in a sticky wicket. The good thing is that he listens to people, has an open mind and takes feedback from experts, does his research before formulating his opinion. Humility is his forte,” stated Jose Sebastian, former school of the Thiruvananthapuram-based Gulati Institute of Finance and Taxation.
The new finance minister’s elder brother Okay N Harilal is an economist of reputation and a professor on the Thiruvananthapuram-based Centre for Development Studies (CDS). Harilal can also be a member of the Kerala Planning Board. “That’s an added advantage; to have someone like Harilal to provide an unbiased opinion on complex economic issues,” stated Sebastian.
Balagopal was within the highlight for his powerful stance on the Goods and Services Tax (GST) as CPM’s deputy chief on the Rajya Sabha in 2017, when the state finance minister Isaac was gung-ho on the brand new tax regime. Balagopal as a member of the Select Committee of the Upper House put a dissent be aware on the GST invoice whereas his occasion colleague Isaac welcomed the GST, predicting not less than a 20 % rise in tax revenues for Kerala. Isaac primarily based his argument counting on the truth that GST was a destination-based tax and would profit Kerala, a client state.
Balagopal, a first-time MLA within the new LDF authorities, in his dissent be aware warned that the GST will take away the rights of the states to resolve taxes in keeping with their social-economic conditions. “GST will take away the rights of the states to plan their revenues. Finance Ministries, both the states and the centre, will end up as distributing agencies with no power to make policy decisions,” he had stated then, including that budgets shall be mere papers and the GST council, managed by the centre, shall be omnipotent.
In a telephonic interplay after taking the oath on Thursday, Balagopal advised The New Indian Express that he fears additional lack of management because the central authorities deliberate to incorporate petroleum and alcohol — a giant income earner for the states — within the GST. “The central government is squeezing the states as part of its policy. If that happens, it would further reduce the states’ revenue,” he stated.
In an earlier interview with this paper, Isaac admitted his calculations went flawed on GST. “I involved myself very hard in GST’s fashioning to ensure that it’s more beneficial to Kerala. For example, there was a big move for manufacturing states to have a special cess for them. We ensured that GST remained a destination tax. There also many other things. The reason why we decided to accept the system was that we thought it was going to improve the tax revenues of Kerala, which will help finance the very ambitious social welfare programme. Which failed for reasons like bad implementation and very low rates fixed. Now there’s no choice. You have to work within the GST, get the support of other states to raise rates to a revenue-neutral level, to ensure much better implementation,” he had stated. Isaac stated the best way ahead is to make GST extra pleasant to the states.
During his stint at Rajya Sabha from 2010-16, Balagopal had additionally taken up the necessity for supporting the rubber farmers and the cashew employees. As finance minister, the brand new finance minister is anticipated to supply some solace to those segments.
Looking again, Balagopal’s stance proved to be proper on the brand new tax regime with reviews suggesting that the GST compensation as a result of states standing at Rs 1.51 lakh crore on the finish of the 2020-21 monetary yr. The GST compensation as a result of Kerala alone stands at Rs 7,077 crore. But what would outline Balagopal’s time period in workplace is his novel beliefs to climate the state’s shaky funds and the way he finds new sources of income for the fast-depleting exchequer.
