In the red, LDF govt singed by UDF protest firestorm over fuel cess

The Congress is planning to take out marches in all district headquarters in the coming days as part of its agitation against the fuel cess. The BJP will also hold a protest on February 9 on the issue.

Caught between reduced revenue, including a dip in the GST compensation from the Centre, and increased financial liabilities, mainly towards salary and social security pension, the Pinarayi Vijayan government has proposed a slew of tax measures in a bid to mobilise additional resource to the tune of Rs 2,950 crore. This is the highest quantum of tax proposals made by the Vijayan government since it first took the helm in 2016.

Presenting the Budget for the 2023-24 fiscal last Friday, finance minister K N Balagopal said, “The (state’s) fiscal constraints in 2023-24 will be more than that of the current year. This is because of the anticipated shortage of Rs 8,400 crore in revenue deficit grant compared to 2022-23, the loss of around Rs 5,700 crore due to the cessation of GST compensation, the resource loss of around Rs 5,000 crore due to the restriction on the borrowing limit as well as the debt likely to be borne by Kerala Infrastructure Investment Fund Board and the Social Security Pension Company during next year.’’

According to the CPI(M)-led LDF, the burden on the state exchequer has increased on various fronts. During 2020-21, an amount of Rs 46,754 crore was required to disburse salary and pension among state employees, which has now shot up by over 24,639 crore to Rs 71,393 crore due to pay revision.

The social security pension has been a flagship welfare scheme of the LDF government, which it has raised to Rs 1,600 per month, giving it to 62 lakh beneficiaries in various categories.

During the previous UDF regime in 2015-16, the government’s liability towards welfare pension was Rs 3,269 crore, which has risen to Rs 11,000 crore per annum following the increase in the monthly assistance.

As the Opposition mounted a protest against the fuel cess and other new tax proposals, the CPI(M) has gone after the BJP-led central government for spiralling inflation and fuel prices.

The Opposition’s protest has come at a time when the CPI(M) is planning to hit the roads across Kerala in the coming days against the alleged “anti-people” policies of the Narendra Modi government.

Blaming the Modi government for the state’s financial crisis, CPI(M) state secretary M V Govindan said: “The Centre has made life miserable for people. Its policies are responsible for the rise in the prices of fuel and essential commodities. There is criticism against the Budget. The government would take necessary steps.”

The Leader of the Opposition in the Kerala Assembly, V D Satheesan, said the government’s tax proposals were “unscientific”, charging that it would adversely impact all spheres of life. “When all other states reduced fuel tax, Kerala has not reduced the tax. It has also imposed cess. This is the biggest looting in the last six years,’’ he alleged.

Kerala’s budget has also proposed to increase the tax on the Indian made foreign liquor (IMFL), which is already taxed at 251% in the state, the highest in the country. The LDF government has planned to mobilise an additional revenue of Rs 400 crore by levying a social security cess at a rate of Rs 20 or Rs 40 on each IMFL bottle.

The Opposition has also criticised the government against the alcohol cess,

cautioning that the hike in liquor price would force people to turn to drugs.

Countering the UDF, the CPI(M) has highlighted that the cess levied on fuel and liquor is meant for mobilising the social security fund for pension, even as it has projected the Opposition’s protest as a “bid to deny pension for the weaker sections”. The ruling party hopes that the Opposition’s protest would fizzle out for want of public support, pointing out that 62 lakh people benefit from welfare pension.