The 2017-18 Kerala Budget will not be presented in January in the context of currency demonetisation, the State’s Marxist Finance Minister, TM Thomas, Isaac has said. The Budget will be presented in the State Assembly only towards the end of February or early March. The Government had earlier planned to present the Budget in January itself.
The Budget would be presented only after studying the impact of demonetisation, the Central Budget for the next fiscal and the revenues and expenses of the Government in January, the Minister said in Kozhikode.
The State Finance Secretary has advised the Government that it should not present the Budget before making a detailed study of the currency crisis.
At the same time, Isaac told the media that salaries of the Government employees for the month of December would be deposited in their accounts as per normal schedule but there would be controls on the amounts they could withdraw due to the cash crunch brought about by the lack of sufficient currency notes.
Stating that shortage of currency notes was likely to be felt in the days after the salary dates, he said employees might be able to withdraw only Rs 12,000 at one time from their accounts and not Rs 24,000. The Government had been able to handle the salary situation on the first pay day–December 1 –after the withdrawal of Rs 500 and Rs 1000 currency notes on November 8.
“The State needs Rs 1,400 crore for disbursing salaries a month but the Reserve Bank has said that it cannot allocate this much money in cash and that the maximum it could allocate was Rs 600 crore. The salary crisis expected to be felt in January could be worse than that of December. This is what is apparent from the words of the RBI and other banks,” Isaac said.
The Finance Minister informed that there had been a drop of Rs 800 crore in the State’s revenues in the context of demonetisation. “The current situation is worse than the one that prevailed during the slowdown of 2008. The State Government has requested the Centre for permission for taking bigger loans,” he said.
As per the State Finance Department’s figures, there has been a drop of Rs 427 crore in the State’s revenues in December alone as a result of demonetization. The State had suffered a fall of Rs 200 crore in the collection of commercial taxes in the first 26 days of December compared to the same period last year.
There had been a fall of 27.3 percent in taxes received from liquor sales till the 26th day in December. The collection of taxes on liquor sales was to the tune of Rs 841 crore in the first 26 days of December, 2015 but this stood at a mere Rs 611 crore in the same period this year. The fall in income from registrations in this December has been to the tune of Rs 35 crore.
Other sectors that showed drop in revenues in December due to demonetization are lotteries and motor vehicles. If the Government had got Rs 540 crore in taxes from lottery sales in December, 2015, this fell to Rs 372 crore this month and the drop in motor vehicle taxes this December has been by Rs 32 crore compared to the same period last year.
As per the records available for period up to December 25, there was a drop of 20 percent in the arrival of domestic tourists and the decrease in foreign tourist arrivals was by ten percent.
Sources in the textile sector said that there had been a drop of up to 40 percent in business. A large number of textile shops had been forced to reduce the number of employees, sources said.
Similar reports have been coming from the retail, small industries, motor vehicle and other sectors. According to T Naseeruddin, president of the Kerala Vyapari Vyavasayi Ekopana Samithi, the retail sector had suffered a drop of up to 70 percent in business since demonetisation. Sources said the small industries sector suffered a 60-percent revenue loss.
