Thiruvananthapuram: On July 6 last year, two days before he presented the first budget of the Pinarayi Vijayan government, finance minister Dr T.M. Thomas Isaac seemed like a man who had discovered the trick that would transform the world. “You will marvel at what I will unveil on Budget Day,” Isaac had not bothered to conceal his delight. Seven months later, and barely a month before he presents the second budget (his seventh in all) on March 3, Isaac is a deeply frustrated man. On Monday, he had made his customary pre-budget shift to the coastal village of Vizhinjam, to the lonely bungalow high up on a cliff overlooking the Arabian Sea. Even the sea breeze that gently flows into the portico of the bungalow, which Isaac had always found rejuvenating, has not lifted the gloom. He conceded that never before had he approached a Budget in such a pessimistic frame of mind.
Isaac had begun with a bang. He had put in place KIIF-B, the country’s first-ever extra-budgetary mechanism to mobilise capital expenditure. His radical proposals like ‘fat tax’ and ‘green tax’ were the toast of the global media. He had even managed to turn around tax collection; during October last tax growth was an encouraging 19 percent. Then, in November, demonetisation happened, and the state economy crashed. Growth in tax collection dipped to negative levels, a first of the state. The Union Budget was also a betrayal. “We were promised that the borrowing limit of states will be increased by at least 0.5 percent. Jaitley didn’t. This has deprived us of Rs 3000 crore,” Isaac said.
There were more losses. Jaitley’s most populist move, slashing income tax for the lower slabs and imposing a surcharge on higher incomes, turned out to be a sly attempt to rob the states. “A cut in income tax means a shrivelling of the divisible pool from which money is transferred to the states. So, by way of compensation, Jaitley could have made a proportionate increase in the tax on higher incomes. Instead, he opted to impose a surcharge, which does not fall in the divisible pool of taxes, and therefore becomes the sole property of the Centre” the minister said. Isaac’s woes are not just of the Centre’s making. The way the bureaucracy has failed to respond to the state's needs seems more infuriating. “Take for instance, the Rs 2000 crore we had sanctioned in the last budget for drinking water projects. The money has been sanctioned but no one has come to us for the money, meaning no project has been firmed up” Isaac said.
His efforts to streamline his own Commercial Sales Tax Department, too, have not paid dividends. He wants a thorough shake up of the bureaucracy. “There has to be a lateral infusion of talent into the bureaucracy,” he said and added: “KAS (Kerala Administrative Service) is the answer,” he added. Without revenues coming in, Isaac knows that there is nothing much that can be done. Yet, he has no plans to moderate his plan expenditure or be less generous with his welfare spending. And there is no one more aware of the dangers of what can undoubtedly be defined as fiscal profligacy. “Revenue deficit will balloon and there will be a massive strain on finances,” Isaac said, as though it cannot be helped.
Stormy ocean, complex stats in perfect harmony
It has become customary for finance minister Dr T M Thomas Isaac to retire to the lonely sloping-roofed inspection bungalow atop a cliff overlooking Arabian Sea annually to write his Budget speech. Except for the writing of his first budget (presented on June 26, 2006), all his budgets were written inside the squat structure with rocky walls and cool interiors. This year is no exception either. He moved to the bungalow, along with his personal assistant, on Monday. His staff will join him in the coming days.
While the writing will be done in the evenings, mornings will be consumed by discussions with officials and experts. Isaac is enthralled by the vastness of the ocean, by the roar of its turmoil. “This is unbelievable,” he said. “Nowhere else will you get this ambience, not even in Kovalam,” he added. The never-ending vastness of the ocean and the mind-numbing complexity of putting the state’s finances in order seem to have the same effect on Isaac: they egg him on, electrify him. But the real reason for Isaac’s move to Vizhinjam is the need for sustained focus.
“With visitors constantly knocking at his doors in Secretariat, it is virtually impossible to do any writing,” said R Ajithkumar, his personal assistant. The place also allows him to strike a balance. After all the sapping brainstorming sessions and complex crunching of numbers, when dusk falls, the minister loves to walk down the craggy steps of the cliff to a secluded cove far below. He will have a crescent-shaped beach all to himself. Vizhinjam offers yet another attraction: access to delightful fish varieties. “He loves fish, it is his favourite dish. But this time we have decided not to have fried varieties,” Ajithkumar said.
