 A welcome feature of the budgets of the four southern states for 2008-09, is that despite mounting welfare expenditure, fiscal deficit has been contained to below 3 per cent of GSDP, falling in line with the Fiscal Responsibility and Budget Management (FRBM) Act. Andhra Pradesh and Karnataka continue to show revenue surplus for the third year in succession. For the first time Tamil Nadu budget also reveals a revenue surplus, but Kerala continues to have revenue deficits.
The figures given in Table 1 reveals revenue and fiscal surplus/ deficits in the four southern states. Though as a percentage of GSDP, fiscal deficit has shown a marginal decline, in absolute terms it has gone up in 2008-09 (B.E.) compared to 2007-08 (R.E).
Mobilisation measures
No new taxes have been proposed in Tamil Nadu, Andhra Pradesh and Karnataka, except for some rationalisation and simplification of tax structures and procedures and plans for better enforcement and collection of tax arrears . Kerala has come out with a few new tax proposals to meet the huge financial commitment on account of social security schemes announced in the budget.
Tamil Nadu: VAT exemptions and concessions
The Tamil Nadu budget for 2008-09 contains proposals to rationalise tax rates on a number of items, with the intent to reduce the inflationary impact without affecting tax revenue.
The budget also proposes to come out with an one time settlement scheme to enable the dealers to settle their sales tax arrears up to 2001-02. According to budget estimates for 2008-09, the state's own tax revenue is expected to be Rs. 33,156.09 crore.
AP: improving tax collection
The Andhra Pradesh budget neither has any proposal to levy new taxes nor any increase in the existing rates. The government strives to augment tax revenues ’by strengthening the revenue earning departments and also by making use of the latest technology like computerisation of commercial taxes and stamps and registration departments with exclusive broadband networking connectivity.’ The state’s own tax revenue has shown a growth rate of around 21 per cent in the last three years and budget estimate for 2008-09 expects this to be at Rs. 37,866.16 crore.
Karnataka: widening the tax base
 The budget for 2008-09 of Karnataka, under President's rule and presented to the parliament by the Union finance minister, contains no new tax proposals. The own tax revenue of the state for 2008-09 is expected to be Rs.31,445.93 crore which works out to an increase of 17.8 per cent over the previous year. One of the major revenue source, state excise duty on intoxicants, is expected to increase by 20.5 per cent in 2008-09 over the previous year. To mobilise revenue the focus will be on rigorous enforcement, widening of tax base and recovery of arrears along with intensive use of information technology.
Kerala: new taxes and reliefs
The Kerala budget for 2008-09 contains several new tax proposals like an 1 per cent cess on sales tax and value added tax to yield Rs.100 crore. It also proposed to impose a surcharge of 10 per cent under the Kerala Surcharge on Taxes Act on big retail chains including direct marketing chains that import more than 50 per cent of the goods from outside the state and have a turnover exceeding Rs.5 crore per annum. This proposal is expected to bring Rs.2 crore. A 10 per cent tax will be imposed under the Kerala Tax on Luxuries Act on rooms in hospitals where the daily rent is Rs.1000 or more and this is expected to generate a revenue of Rs.1 crore. Rs.25 crore is expected by increasing the tax on ordinary lottery draws to Rs.7 lakh and on bumper draws to Rs. 17 lakh.
 In the area of tax concessions the following announcements have been made in the budget: while exempting paper bags from tax, it is proposed to increase the tax on plastic carry bags to 12.5 per cent. Tax rates on generators, computer peripherals and all kinds of hospital equipment have been reduced to 4 per cent. Sale of prasadams and goods received as offerings from devotees will be exempted from tax. It is also proposed to reduce the tax on all items supplied to the Kerala State Electricity Board and Kerala State Road Transport Corporations to help meet the tough competition from inter-state operators. Tax on used car sale has been reduced from 4 per cent to 0.5 per cent of their value. Tax concessions are expected to result in a revenue loss of Rs. 25 crore. In addition to the above, the budget contains a number of proposals for simplification of procedures for tax assessment and collection. The budget estimates for 2008-09 expects the state's own tax revenue to be Rs. 15,780.85 crore.
Development and welfare
Tamil Nadu: priority to agriculture and social welfare
The TN budget contains several proposals to rejuvenate the deteriorating agricultural sector in the state. Following the waiver of co-operative crop loans to the tune of Rs. 7000 crore, the budget now proposes to disburse new crop loans to the tune of Rs.1500 crore in 2008-09. The rate of interest on crop loans will be further reduced from 5 per cent to 4 per cent. A sum of Rs. 40 crore has been allocated for crop insurance to 25 lakh farmers and another Rs.152 crore for implementing social security and welfare schemes for agricultural labourers and farmers. The newly introduced method of paddy cultivation, namely System of Rice Intense Irrigation (SRI), to increase production with reduced cost, will be extended to 18.75 lakh acres. A subsidy of 25 per cent will be given to farmers for purchasing and using machinery for agricultural activities. Ten thousand new Self Help Groups (SHGs) consisting of one-lakh farmers will be formed and each group will be provided with Rs.10 crore of revolving fund through co-operative banks. Women Self Help Groups to be given Rs.22 crore through the Tamil Nadu Co-operative Milk Producers Federation for purchase of milch animals. In the area of irrigation and flood control,the World Bank-aided IAMWARM project gets Rs.580 crore, linking of inter-state rivers by using surplus flood water in Cauvery gets Rs.165 crore, and Tamirabarani scheme gets another Rs.369 crore. A sum of Rs.1950 crore has been allocated towards food subsidy to implement the Rs.2/ kg rice scheme and another Rs.750 crore has been earmarked for free distribution of colour television sets.
Health and family welfare department gets a sum of Rs.2741 crore; in addition a sum of Rs.2221 crore has been allocated for purchasing medicines for government hospitals.
The budget proposes to set up SEZs for transport engineering goods at Gangaikondan, automobile auto spare parts at Cheyyar, engineering goods at Perundurai and leather goods at Ranipet. A sum of Rs.2860 crore towards capital expenditure for improving roads and bridges has been allocated. Total budget of the highways department is Rs. 4179 crore. For the energy sector an allocation of Rs.1720 crore has been made for the improvement of power transmission and distribution infrastructure. It has also been proposed in the budget that during the financial year, 3500 new buses will be purchased at a cost of Rs.482 crore. Rs.25 crore has been alloted for tourism development, Rs.10 crore for afforestation, Rs.2.34 crore for sports and Rs.782 crore for integrated child development schemes.
Other important allocations made in the budget are : Rs.300 crore as state's share for metro rail projects, Rs.210 crore as state's share for concrete roofing of houses, and loan and interest waiver schemes for the borrowers of housing loan from urban and taluk co-operative housing societies. Rs.504 crore has been allocated for Anaithu Grama Anna Maru Malarchi Thittam to undertake infrastructure related works in 2521 village panchayats. A revived Namakku Naame Thittam gets Rs.50 crore in the budget. A sum of Rs.830 crore has been earmarked for old age and widow pension schemes.
The internationally acclaimed Nutritious Noon-meal programme gets Rs.820 crore. A separate allocation of Rs.2312 crore for Adi Dravidar and Tribal welfare has been made and another Rs.112 crore for scholarships to BC, MBC and de-notified communities.
AP: emphasis on employment generation and welfare
In the Andhra Pradesh budget agricultural development has been allocated Rs.310 crore for crop loan, Rs.400 crore for Rashtriaya Krishi Vikas Yojana scheme, Rs.200 crore for distribution of one-lakh milch animals and Rs.100 crore for establishing a world class centre for advanced research for livestock at Cuddapah district. For irrigation a sum of Rs.16,500 crore has been allocated.
 The state has 71 SEZs attracting a capital investment of Rs.35,000 crore and expected to provide employment to 25 lakh. Information technology sector, which contributes to 52 per cent of total exports of the state, has been allocated Rs.397 crore for 2008-09 compared to Rs.85 crore in 2007-08. It is proposed to make an allocation of Rs.1445 crore for the development of roads and bridges. A sum of Rs.60 crore has been earmarked for the development of airports and another Rs.55 crore for the establishment of A.P. Aviation Corporation in the public sector. An outlay of Rs. 65.24 crore has been made for the development of the proposed Krishnapatinam port.
To provide food and nutrition security, The AP government has decided to launch a Rs.2/kg rice scheme: an allocation of Rs.1980 crore has been proposed towards rice subsidy during 2008-09. An amount of Rs.471 crore has been allocated in the budget for Anganwadi centres to provide nutritional support to pregnant women and children. For employment generation, an amount of Rs.130 crore for training youth for employment programmes in IT and other sectors, Rs.87.50 crore for self-employment programmes and another Rs.300 crore as state's share for rural employment guarantee scheme of the Union government have been alloted. An amount of Rs.5850 crore has been provided for the Phase III of the INDIRAMMA housing programme.
In the field of education, scholarships to economically weaker sections gets Rs.25 crore, backward classes and minorities get Rs.185 crore, Rs.853 crore provided for mid-day meals scheme, Rs.250 crore as state's share for quality secondary education, Rs.60 crore for computer education and another Rs.400 crore for the development of infrastructural facilities in schools. In the field of higher education Rs.320 crore has been earmarked for the establishment of 3 new institutes of information technology. A substantial increase in allocation has been made to the extent of Rs.1315 crore for medical and health departments.
Towards social pension scheme to the aged, orphans and destitutes the budget has made an allocation of Rs.1390 crore and Rs.34.40 crore for financial assistance to handloom weavers. SHGs in rural areas will be given facilities to secure a loan of Rs.10,000 crore from banks. Rural development and up- gradation of drinking water supply to rural habitations gets Rs.840 crore and the Jawaharlal Nehru National Urban Renewal Mission schemes for integrated development of slums gets an allocation of Rs.1500 crore. The budget makes a total allocation of Rs.3136 crore to municipal administration and urban development department for 2008-09.
Karnataka: focus on rural development
The emphasis in the Karnataka budget for 2008-09 is on sustaining the economic growth of the state while seeking to uplift the economically and socially weaker sections. The budget seeks to initiate special steps to improve the productivity of the agricultural sector and the economic condition of the farmers. Allocation to agriculture and horticulture is Rs.1564.51 crore out of which Rs.220 crore is earmarked for improving the economic condition of the farmers in the state. An allocation of Rs. 4542 crore has been made for major and minor irrigation out of which Rs.108.35 crores for comprehensive watershed development projects, and Rs.10 crore for ground water recharging projects. Other allocations made are: Rs. 549.23 crore for Animal Husbandry and Fisheries, Rs.138.45 crore for sustainable forest management and bio-diversity conservation projects and another Rs.25 crore as a new initiative for food security to undertake procurement operations and to supply food grains at Rs.3 / kg to BPL beneficiaries under Public Distribution System.
 The proposed outlay for rural development programmes is Rs.3350.97 crore, out of which Rs.350 crores goes to rural roads maintenance, Rs.120 crore for strengthening minor irrigation tanks, Rs.300 crore for integrated development of villages programme called 'Suvarna Gramodaya' programme and Rs.160 crore for 'Gram Swaraj' projects. The outlay for public works schemes like roads, bridges and public buildings has been fixed at Rs.3271 crore out of which Rs.240 crore will be provided for important roads in and around Bangalore and another Rs.300 crore for maintenance of major district roads. Under infrastructure development projects an outlay of Rs.449.21 crore has been made for setting up and up- gradation of airports in the state.
Education sector gets Rs.8592.23 crore out of which Rs.300 crore goes for the construction of new buildings and Rs.44 crore for establishing new industrial training institutes. The outlay for the health sector has increased to Rs.2122.87 crore in 2008-09 compared to Rs.1869.40 crore in 2007-08. Apart from the above housing and urban development sector gets Rs.875.3 crore, rural electrification subsidy Rs.1700 crore, transport sector Rs.2442.59 crore, information tourism and youth services Rs.204.51 crore and another Rs.64 crore for employment generation in garment sectors.
Under welfare expenditure an outlay of Rs.1684.05 crore has been earmarked for the welfare of SCs, STs, BCs and Minorities, Rs.953.82 crore for women and child development and out of which Rs.478 crore for integrated child development schemes.
Kerala: welfare of working class
In the Kerala budget for 2008-09 an outlay of Rs.365 crore has been provided for agriculture and allied sectors. In this Rs.20 crore is set apart for interest subsidy to farmers and another Rs.15 crore for integrated coconut development programme. Rs.50 crore has been provided in the budget for debt relief to farmers. The monthly pension of unorganized workers working in agricultural, fisheries, coir, handloom, construction, etc. will get an increased monthly pension of Rs.200. A health insurance scheme for all families below poverty line has been announced in the budget with an outlay of Rs.20 crore. Grass root level social organization for implementing poverty eradication programmes called kudumbashree gets an allocation of Rs.30 crore. Other important allocations made in the budget are Rs.2 crore for dairy farmers’ welfare fund, Rs.5 crore for modernisation of coir industry, Rs.5 crore for retirement benefits to cashew workers, and an one time assistance of Rs.16 crore for the Cashew Corporation.
An outlay of Rs.257 crore is set apart for irrigation and sea wall construction. For increasing the generation capacity the existing schemes get an allocation of Rs.196.50 crore and the new Athirappalli project gets an allocation of Rs. 60 crore. Roads and bridges get an allocation of Rs. 705 crore, water transport Rs.109 crore, tourism Rs.98 crore and information and technology sector Rs.78 crore. Other major allocations made are Rs.31.50 crore to higher education, Rs.175 crore for school education, Rs.133 crore for health sector, Rs.17.50 crore for renovation of houses, Rs.60 crore for integrated housing and slum development programmes and under social welfare Rs.179 crore set apart for SCs special component plan, Rs.60 crore for Tribal sub plan, Rs.16 crore for development of backward classes, and Rs.2.25 crore for gender awareness programme. The budget also has made a provision of Rs.700 crore for writing off the tax arrears of Kerala State Road Transport Corporations, Rs.1006 crore to write-off the interest on loans drawn by Kerala Water Authority and another Rs.839.60 crore given as loan to Kerala Water Authority will be converted as interest -free fund.
Annual Plan outlays
Annual plan outlays for 2008-09 (B.E) have gone up marginally in all the four southern states with the maximum of 30.52 per cent in Andhra Pradesh and minimum of 12.5 per cent in Tamil Nadu compared to 2007-08 (R.E)
Tamil Nadu state's outlay for the Eleventh Five Year Plan period (2007-2012) has been approved for Rs.85,345 crore. For the annual plan 2008-09 an allocation of Rs.16,000 crore has been made. Major allocations have been made for agriculture and irrigation sector including loan waivers to farmers and interlinking of state rivers. Apart from this, infrastructure sector has been given top priority followed by health and education in the allocation of plan funds.
Andhra Pradesh's plan size is the highest in the country for the last two years with an allocation of Rs.43,203 crore and it continued to be the same for 2008-09. Agri-culture and allied sector is allocated an outlay of Rs.2723 crore, 144 per cent higher than the current year. Irrigation and housing gets top priority followed by the infrastructure and industrial sectors.
Karnataka's state plan outlay for 2008-09 reveals substantial increase, mainly due to increase in allocation for agriculture, rural development, education, water supply and sanitation, housing, urban development, and social security and welfare schemes. The plan outlay of Rs.21,751 crore for 2008-09 includes a sum of Rs. 2459 crore earmarked as special development plan for backward areas in the state to reduce regional imbalances.
Kerala state's plan outlay of Rs. 7700 crore for 2008-09 is 13 per cent higher than the previous year. The development strategy of Kerala revealed in the budget document says that the present higher level of growth is mainly fueled by consumer services whereas it is necessary to link economic growth with increase in production. Towards this objective more plan allocations have been made for agriculture and traditional industries on which depends the livelihood of majority of people. As in previous years service-based sectors like tourism, skill-based areas like light engineering and technology -intensive industries like information technology continue to get substantial allocation in the budget for 2008-09. |
