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State budget in March
February, 01st 2010

Contrary to his earlier resolve to move a step ahead of the Centre, Finance Minister T M Thomas Isaac has decided to present the State Budget 2010-11 only a week or more after Pranab Mukherjee presents the Union Budget on February 26. Reason: The Finance Minister wants to know what an increasingly stingy Centre has in store for the state and then act accordingly.

Isaac will present his fourth budget either on March 5 or March 12. ``We hear that the Governor has plans to visit Mumbai soon. So the presentation of the Budget will depend on his plans. We will get a clear idea after Vijayakumar (the Parliamentary Affairs Minister) talks to the Governor, Isaac said.

The Finance Ministers resolve to present the state budget before Pranab Mukherjee presents the Union Budget seems to have been hit by the poor expectations from the 13th Finance Commission.

Our feeling is that the 13th Finance Commission will squeeze the state even further. So we thought of waiting till the Central Budget and then rework the budget accordingly.

Ideally, we are looking for at least a week after the Union Budget to present ours, Isaac said.

Whatever be the Finance Commissions recommendations, the Finance Minister said he would not cut down on social spending. I am clear about that.

The only thing is the revenue deficit will go up. Bridging the revenue gap is not the states responsibility alone, the Centre too has a role to play in this, Isaac said.

In his 2008-09 budget speech, Isaac had declared that he would avoid revenue deficit by 2010-11. ``But if you read my speech carefully I had inserted a condition. I had said it depends on the Centres approach, Isaac said.

The Finance Minister fears that the 13th Finance Commission might cut down the States share of taxes.

What I heard is that the Commission might reduce the share to 2.34 percent from 2.67 percent. This is shocking. It means the state stands to lose at least Rs 1,000 crore yearly. In such a situation, it would be impossible to avoid a revenue deficit in the next year or the year after next, Isaac said.

If the Centre insists on bringing down the deficit even after arbitrarily slashing the States share, the minister said it could only mean that the Centre wants the states to make up for the loss by cutting down on social spending.

But we will not reduce social spending.

And we are not ready to accept a Fiscal Stabilisation Programme based on such an unfair devolution of Central resources, Isaac said.

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