Astute Mani does a balancing act

In the budget speech delivered by the finance minister K M Mani several changes have been announced across various sectors of the economy.
With a wafer-thin majority for the government,the finance minister faced several challenges while presenting his 10th budget. Various projects including the metro and monorail projects, Vallarpadom and Vizhinjam projects, high-speed rail projects have been given emphasis which will give a thrust to infrastructure growth in the state. In the education sector, allocation has been made for several projects including medical colleges at Wayanad, Kollam and Palakkad and an amount of Rs 5 crore has been set apart for the initial funding for the IIT project at Palakkad.
On the taxes and levies front, Mani has taken bold steps on the one hand and also played to the masses on the other hand. The increase in standard VAT rates by 1%,in addition to the increase in indirect taxes in the Union budget, will definitely have an inflationary impact. The increase in road tax for private vehicles and land tax will result in higher revenue for the government. The finance minister has also increased the taxes on goods such as cigarettes,pan masala, IMFL, and plastic bags which are hazardous to the users and to the environment.
The reduction in VAT on edible oil and several daily household provisions will be a matter of great joy for the common man. Mani has reduced the taxes on certain expensive medical accessories including intra-ocular lens, heart valve and cardiac stents. Also,the tax on e-toilets and cradles have been reduced. Honey, hives and apiary implements have been exempted from tax. Ayurvedic products classified as cosmetics will cost less due to reduction in taxes and this may boost the ayurvedic cosmetic industry in the state. Coconut water has been declared as the most favoured drink of the state and tax on packaged coconut water has been reduced. To conclude, Mani has presented a balanced budget and the critical challenge faced by the government is to implement the projects and proposals envisaged in the plan.
(The writer, Vivek Krishna Govind, is partner,Varma & Varma Chartered Accountant and former chairman of ICAI.)