THIRUVANANTHAPURAM: The traditional economic logic that fall in rubber prices will not lead to a proportionate drop in the consumption of rubber farmers is gradually being dumped. Contrary to all expectations, and alarmingly for the state’s economy, it has been found that the consumption of rubber farmers has been falling steeply over the last three years. There is no sign of demand picking up even though the price of rubber has swelled from a low of Rs 80 to Rs 140 a kg.
“Growth in tax revenue is least in rubber belt areas like Kottayam, Pathanamthitta and Kollam and Idukki,” a top tax official said. “This can only mean that rubber growers are not consuming the way they used to and it is hitting the state hard. Even in the late 90s when the rubber prices dropped to below Rs 20 from a high of Rs 60, consumption had remained steady,” the official said. Tax sleuths view automobile sales as a barometer of consumption in an area.
“Automobile sales in rubber belts have dropped drastically in the last six months. This could be one major reason why there is no significant growth in motor vehicle tax,” the official said. Growth in motor vehicles tax is crucial for the success of the Rs 12,000-crore Stimulus Package announced in the LDF’s ‘Alteration Memorandum’. No wonder finance minister Dr Thomas Isaac has persisted with the Price Stabilisation Scheme for Rubber launched by the UDF government.
In fact, it would serve Isaac well to carry forward the UDF’s strategy, or even scale it up, as high rubber prices, consequently high consumption, historically had a favourable impact on the state’s tax growth. The years when tax growth touched record levels, in 2010-11 and 2011-12, were also the years when rubber prices touched dizzying heights. Rubber is also the commodity that contributes the fourth highest tax to the state after petrol, IMFL and motor vehicles.