Kerala has targeted a 25% rise in tax collection - a sharp increase from the 19% average growth during the past five years.
The revised annual budget the state’s Finance Minister T M Thomas Isaac presented in the state assembly yesterday, also envisages resource mobilisation from non-conventional sources including Islamic finance for infrastructure funding.
“We cannot attract private investments offering freebies and cheap labour like others do. We would attract them with world-class infrastructure instead,” he said while presenting the Left Democratic Front (LDF) government’s first budget.
It also marked a paradigm shift in the LDF’s approach to development, vowing to pursue all big ticket projects of the previous Congress-led government which included a high-speed rail corridor.
He also promised to complete land acquisition for 45-metre-wide highways, LNG pipeline to ensure energy security, road connectivity for the new Kannur international airport and expansion of the Thiruvananthapuram and Calicut airports.
The budget proposed a stimulus package of Rs120bn for taking up various development and infrastructure projects like roads, bridges and IT parks.
Isaac said steps would be taken to attract Rs1tn investment in various sectors in the next five years and continue various welfare measures for the downtrodden.
By the next five years, he said, a government school in all the 140 assembly constituencies would be upgraded to international standards and Rs10bn has been earmarked for the same.
“A total of Rs2.5bn is expected for the purpose this year,” he said. “The project will be implemented in co-operation with certain foundations which have come forward to support the scheme.”
The stamp duty on land registration has been increased to eight percent from the present six percent.
While the opposition described the budget as unrealistic and targets unachievable, the trade and industry praised the proposals as business-friendly.
“He seems to be living in a dreamers’ world,” leader of opposition Ramesh Chennithala said.
SmartCity Kochi CEO Dr Baju George said the proposal to attract investment to the tune of Rs1tn in two years is a testimony to the development agenda of the government.
“The allocation of Rs50bn for infrastructure development, especially roads and bridges and the development of parallel transport system like inland waterways, will enhance the investment climate in the state,” he said.
“The proposal to allot Rs13.25bn for the development of IT parks is a welcome decision”.
Kerala Travel Mart Society president Abraham George welcomed the proposal to create 400,000 jobs in the tourism sector.
“The budget has clearly made the tourism sector a priority. With the proposal of employment creation, tourism will become a major engine for economic growth and development of the state. The government has lined up more than 1,000 projects, which will account for the development of new destinations as well as improvement of the existing tourist spots,” he said.
Startup Village chair Sanjay Vijayakumar said the allocation for startups was even higher than that allocated by the government of India’s department of science and technology for the entire country, and the largest so far in the state.
“Isaac has given a fillip to the startup ecosystem with a well-structured and significant allocation that covers all three main components — infrastructure, startup programmes and funding — in the startup ecosystem,” he said.  
“The real game changer is the whopping Rs1.5bn allocation for telepresence at engineering colleges, which will bring strong industry-academia collaborations and linkages for our students with global mentors from Silicon Valley.”

Incentives for diaspora unveiled
There has been an increased allocation for the diaspora in the revised budget presented in the Kerala assembly by state Finance Minister Thomas Issac.
“At present there is an allocation of just Rs100,000 in the welfare fund for the returning diaspora, and I am increasing it to Rs100mn. This is meant to increase the benefits paid out to the needy,” Issac said.
He also decided to double from Rs120mn to Rs240mn the allocation in the scheme for rehabilitation of those expatriates who have returned to the state.
“The previous government had begun a loan scheme jointly with financial institutions for the diaspora who wish to start a business. But that programme failed to take off due to non-payment of back-end subsidy upfront. We will ensure that the back-end subsidy is paid upfront,” said Issac. He also pointed out that on account of the slowing of the Middle East economy, the fortunes of the diaspora might get affected, which is a cause of concern.
“There are two sections of our diaspora: Those who seek rehabilitation once they are here, and the other group that is looking to invest and also seeking jobs. We are planning special parks where the diaspora can invest,” added Issac.