The price of Indian-made foreign liquor, along with petrol and diesel, will go up in Kerala due to the increase in social security cess in the state budget for the financial year 2023-24.
According to the state budget, a social security cess of Rs 20 will be added on every bottle of IMFL with MRP between Rs 500 and Rs 999, while Rs 40 will be added on a bottle with MRP above Rs 1,000. The state government is expecting an additional revenue of Rs 400 crore from this. A social security cess of Rs 2 per liter has been imposed on petrol and diesel, for which Rs 750 crore is likely to be collected.
Finance minister KN Balagopal in his budget speech allocated Rs 2,000 crore to tackle the price hike, while Rs 10 crore was set aside to promote the use of eco-friendly and cost-effective menstrual cups instead of sanitary napkins. Awareness programs and campaigns will be conducted at the government level in schools and colleges.
A total outlay of Rs 2,828.33 crore has been earmarked for the medical and public health sector in the financial year 2023-24. This allocation is Rs 196.50 crore more than that of the financial year 2022-23. Kerala is looking at the global potential in the healthcare sector and is transforming the state into a global healthcare capital. An amount of Rs 30 crore has been earmarked for preparatory activities for formulating, implementing and facilitating the care policy based on this possibility.
“Kerala has a huge labor force with skills and expertise in the healthcare sector. They make up a considerable percentage of healthcare workers around the world. The cost of healthcare in developed countries is very high. Kerala has the human resources that can transform it into a global healthcare capital; And a health network which can be further developed,” Balagopal said during his budget speech.
He said that foreigners can be attracted towards the state for providing treatment and healthcare services at low cost. He said activities would be expanded to turn the state into a health hub by providing better services in areas such as healthcare and health tourism, while existing facilities could be expanded and modernised.
The state government considered the conservative fiscal policy implemented by the central government as the biggest challenge to Kerala’s alternative development model. “But we are not ready to give up on our alternative model or its virtues despite the constraints introduced by the central government. Kerala has not reached here without facing any crisis,” said the state’s finance minister, adding that the state is not in any kind of debt trap.
“Kerala is not in a debt trap; There is no change in our approach to debt. We are not of the view that the hard earned money of common people invested in various financial institutions should be given loans only to bad credit corporates. We are of the opinion that the Central and State Governments will carry out more developmental, welfare activities by taking more loans. But the central government is reluctant to relax the conservative stand,” he said.
increased fair value of the land
The fair value of the land has increased by 20 percent. The Finance Act, 2020 has included provisions to enhance the fair value of land by 30 per cent in areas where the market value has increased due to various reasons; A detailed study will be done to lay down guidelines for identifying areas to be notified.
In the real estate sector, in 2010, the stamp duty was reduced to 5 per cent for flats/apartments transferred within six months from the date of allotment of building numbers by local bodies. It is now proposed to revise it from 5 per cent to 7 per cent keeping in view the existing stamp duty rates.
Additional stamp duty rates levied for resale of land purchased within a period of three and six months will be waived off. The one-time tax on newly purchased motorcycles with a purchase price of up to Rs 2 lakh has been increased by 2 per cent. This is expected to generate an additional income of Rs 92 crore.
one time tax on cars increased
The one-time tax on newly purchased motor cars and personal service vehicles for personal use has been increased as follows:
Purchase price up to Rs 5 lakh: 1% increase
Purchase price above Rs 5 lakh and up to Rs 15 lakh: 2% increase
Purchase price above Rs 15 lakh and up to Rs 20 lakh: 1% increase
Purchase price above Rs 20 lakh and up to Rs 30 lakh: 1% increase
Purchase price above Rs 30 lakh: 1% increase
These changes are expected to generate an additional revenue of Rs 340 crore.
Property tax amendment in LSGI is long pending. The state government wants to amend property tax, application fee, scrutiny fee and permit fee for the construction of residential and non-residential buildings. A proper method of taxation of multiple ownership of houses by a single person and newly constructed houses which are not in use will also be adopted. These will be comprehensively vetted by the LSG department. If these measures are implemented, at least Rs 1,000 crore is expected as additional revenue.
Meanwhile, electric motor cabs and electric tourist motor cabs currently attract a one-time tax ranging from 6 per cent to 20 per cent of the purchase price. This one-time tax on such vehicles is reduced to 5 per cent of the purchase price, equivalent to the one-time tax on electric private vehicles to reduce air pollution and promote public transport. Since the one-time tax on all types of electric vehicles has been fixed as 5 per cent of the purchase price for a period of 15 years, the existing 50 per cent tax exemption for the first five years for such vehicles has been abolished.
ENA production to be encouraged
In Kerala, the excise department has issued licenses for the production of liquor within the state, but Extra Neutral Alcohol (ENA), the raw material needed to make liquor, is being imported from other states. On an average, 50 million liters of ENA is imported from other states every year. Production of ENA within the state will create new employment opportunities. Measures will be taken by the government to encourage the production of ENA.
Government approved- Production of horti-wine from agricultural products available in the state except cereals. The existing tax structure of Indian Made Liquor will be made applicable to Horti-Vine, which will help farmers.
social welfare allocation
Through the NORKA Assisted and Mobilized Employment (NAME) scheme, it is intended that one lakh manpower days will be provided to migrant laborers for a maximum of 100 days to provide employment to migrant labourers. Rs 5 crore has been kept for this scheme.
The government is paying significant attention to the rehabilitation of the returnee NRIs and is devising new skill development programs for their survival. For this, Rs 84.60 crore has been earmarked through various schemes.
An amount of Rs 19.30 crore has been set aside for various schemes of the Kerala State Women’s Development Corporation. An amount of Rs 8.50 crore has been provided as the state’s share for the scheme aimed at the continued functioning of the existing 28 POCSO fast-track special courts and setting up of 28 new courts.
An amount of Rs 13 crore has been earmarked as the state’s share for the activities of the Integrated Child Protection Scheme. An amount of Rs 19.50 crore is estimated as the central share. An amount of Rs 194.32 crore has been set aside as state share for the Integrated Child Development Services Scheme. An amount of Rs 291.48 crore is estimated as the central share.
Rs 10 crore has been kept for Gender Park. An arrangement of Rs 152.90 crore has been made for the modernization of the police department. A new scheme Dementia/Alzheimer’s Memory Screening Clinic has been announced through the Kerala Social Security Mission. An arrangement of Rs one crore has been made for the scheme.
An additional amount of Rs 7 crore is provided for interventions and inspections to ensure safe food, prevent food poisoning and upgrade food quality. Rs 1,773.09 crore has been set aside as State Plan outlay for the education sector. Rs 75 crore has been earmarked for the development and improvement of state highways.
Balagopal said the figures indicate that Kerala is back on the path of development and prosperity. “We have been able to courageously face and survive one challenge after another like demonetisation, unscientific implementation of GST, Ockhi disaster, flood, pandemic, economic crisis, inflation since 2016. In 2021-2022, Kerala’s GDP is set to grow at constant prices. from 12.01 per cent,” Balagopal said.
The Finance Minister further said that as far as Kerala was concerned, a more serious threat was the shift to fiscal federalism, which is against the spirit of the Constitution. “The centralization of power and disregard for the states, especially Kerala, has increased unprecedentedly. During the tenure of the Tenth Finance Commission, Kerala’s share was 3.875 per cent of the divisible pool to be distributed among the states. By the time of the Fifteenth Finance Commission, it had come down to 1.925 per cent. Through this, the central government cut the revenue of Kerala by thousands of crores. There is a shortfall of about Rs 6,700 crore due to a cut in the Revenue Deficit Grant by the Centre.
As a result of abolition of GST compensation, there is a shortfall of about Rs 7,000 crore during the current financial year. As a result of the Central Government’s policy of treating the public account as a debt liability, there is a loss of revenue of about Rs 10,000 crore every year.
“The policy of taking the liability of institutions like KIIFB, Social Security Pension Limited as state government liability from outside the budget is also limiting our borrowing capacity,” the minister said, adding that there would be a shortfall of Rs. 3,100 crore in the account. There has been a shortfall of about Rs 4,000 crore in resource mobilization due to restrictions on market borrowing limits.
Kerala is also being sidelined in the allocation of centrally sponsored schemes. Can anyone justify this position with a commitment to the people of Kerala?” he asked.
More fiscal constraints this financial year
It is estimated that the fiscal constraints in 2023-2024 will be higher than in the current year. This is on account of an estimated shortfall of Rs 8,400 crore in revenue deficit grants compared to 2022-23, a loss of about Rs 5,700 crore due to the abolition of GST compensation, a resource loss of about Rs 5,000 crore due to restrictions on borrowing limits. as well as the shortfall on account of the debt to be borne by KIIFB and the Social Security Pension Company during the following year.
Balagopal said that as the state is recovering from the economic crisis and is on the path of development, this fiscal policy of the Center will adversely affect the development. “We must understand that the state is facing a tough budget constraint. In the present scenario, it cannot overcome the strict and stringent norms laid down by the Centre. The taxation powers of the state are limited. Borrowing powers are also strictly restricted,” he said.
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