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Kerala flays Sinha, allocates Rs 390 million for food subsidy in its Budget

Kerala's Finance Minister T Sivadasa Menon today said that Rs 390 million had been earmarked in the state budget to meet additional commitment if the central government does away with the subsidies on the public distribution system or PDS commodities as announced in the Union Budget.

Presenting his fifth budget to the state legislature, he said the Centre's decision would have serious implications on a state like Kerala that depends on the PDS for food security.

He hoped that better sense would prevail in the light of voices raised by well-minded citizens against the Centre's efforts to economise at the expense of the poor and the deprived.

Menon said the Centre would give 20 kg of rice at subsidised rates under the 'targeted' PDS to only 25 per cent of the state's population, though 42 per cent were living below the poverty line or BPL. This means the state government should take upon itself the responsibility of subsidising the 20 kg of rice to 17 per cent of those living below the poverty line.

He said if the Centre persisted with its misguided policy, the state was committed to maintaining food security despite the fact that the financial implication to achieve this without the central help was daunting. "We are committed to keeping the 42 per cent of our population, who are below the poverty line, within the PDS by giving the entire 20 kg of grains announced by the Centre at the ration price itself," he asserted.

Besides, the state would continue the one rupee per kg subsidy on 16 kg of rice for all the ration card holders, irrespective of their economic status, he added.

Menon said hardly any sector had been given a boost in the Union Budget. He said there was a 'regressive movement' towards a tax regime that preserved and protected the interests of a small fraction of the population that owned 80 per cent of the total wealth of the country.

"One sees a very dismal picture of the economy in the central Budget as a rudderless boat, cut loose from its anchor and left to the vagaries of the weather," he said.

"The focus of the central Budget in fiscal management lay in two retrograde directions: the first in reducing subsidies for the poor under the guise of 'targetting' them and the second in frittering away the precious wealth of the nation under the camouflage of divestments," he stated.

The country's financial managers have totally ignored the extent of tax evasion and avoidance prevalent in the country, he said.

Menon said the lowering of the customs duty and hiking of the excise duty in the Budget would strike at the roots of the state's indigenous manufacturing sector and widen the trade deficit, apart from inducing strong inflationary trend in the economy.

"The emphasis seems to be on bringing in more tax-payers within the tax net. The approach seems to be targeted at the middle class, and turns a blind eye to the pattern of concentration of wealth in the country," he alleged.

Menon also announced the following relief measures in his Budget for Kerala:

• Exemption from payment of tax in respect of fishing net, outboard motor engine of less than 15 HP (horsepower) sold by apex cooperative societies, paddy procured by paddy procurement cooperatives for modern rice mills, solar energy devices and reduction of tax rate on chemically-treated rubber wood from eight to four per cent.
• Instead of tax exemption for Khadi and Village Industries or KVI units having a turnover of up to Rs 1 million, all units mentioned in the schedule to the Khadi and Village Industries Commission Act would be completely exemped from tax. In the case of other KVI units the rate of tax would be reduced to four per cent.
• A series of measures intended to increase efficiency of tax administration and to prevent leakage of revenue have been proposed. He expected an additional revenue of Rs 500 million from this. He set apart Rs 50 million for strengthening of commercial tax check posts and to carry out necessary repairs keeping in view the special report of the assembly subjects committee.
• He said the tax on agricultural produces like turmeric, nutmeg, clove and kacholam would be reduced from eight to four per cent, thus incurring a revenue loss of Rs 10 million to the state exchequer.
• Rubber cultivators having an extent of up to 20 hectares would be exempted from payment of agricultural income tax for one more year.
• In the case of coffee growers affected by price fall, those holding up to 20 hectares of land under coffee would be exempted from payment of agricultural income tax for one year.

UNI

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