Left leaders give Kerala budget a thumbs up

The Central leadership of the CPI(M) has distanced itself from the publicly-aired differences between the West Bengal and Kerala governments over the cola ban and labour laws.

But a thumping endorsement of Kerala's revised budget "" two months after it was presented "" in the latest issue of People's Democracy, the party's mouthpiece, shows clearly whose side the central leadership is on.

Kerala Finance Minister T M Thomas Isaac got rave reviews for his prescription that includes rejection of fiscal responsibility legislation, changes in VAT design, heavy taxes on mineral and aerated water, taxes on tourism-related items and continuing the supply of rice at Rs 3 per kg through the public distribution system.

The party hailed these features of Kerala's revised budget as "a major inspiration" for its struggle against "neo-liberal" economic reforms.

One of the most significant aspects of the budget is its rejection of the Kerala Fiscal Responsibility Act 2003 passed by the UDF government. To set targets for how much a government should spend for the welfare of its people is fundamentally an "irrational idea", said the article.

"There are fears that the Centre may resort to cuts in resource transfers to Kerala. However, the LDF government is getting ready to lock horns with the Centre on this issue," it said.

The political message from Kerala's budget is that governments should display strong political will to tax the richer sections and luxury goods to mobilise revenues. The Kerala government announced it would not disinvest or sell any profit-making PSU to raise revenues.