BENGALURU: In the last three years, Karnataka has become over-dependent on market borrowings to finance its fiscal deficit, a State Bank of India (SBI) report said.“The ratio of interest payment to Gross Fiscal Deficit has reached 46 per cent in financial year 2019 from 42 per cent in financial year 2017. “The same can be figured out from the ratio of total liabilities to GSDP (Gross State Domestic Product) as in financial year 2017 the share was 18.9 per cent and it is projected to reach 20.4 per cent in financial year 2019. “Now, it is an alarming signal to the state government, to improve its tax base in order to avert a deteriorating fiscal situation in future,” SBI Ecowrap report said.
The report, in its critical evaluation of the state budget presented by Chief Minister Siddaramaiah, stated that over the years, the state’s share in both tax revenue and non-tax revenue with respect to GSDP is declining. In 2011-12, Karnataka own tax revenue as percentage of GSDP was 16.07 per cent, which has declined to 11.14 per cent in 2017-18. Similarly, the share of non-tax revenue has declined from 10.7 per cent to 7.3 per cent during same period, the report stated.
In the budget 2018-19, Karnataka government has estimated the revenue receipts to be `1.63 lakh crore, which is 11 per cent higher than the previous year. The state’s own tax revenue, including GST compensation is estimated to be at `1.03 lakh crore, an increase of 13 per cent over 2017-18. In non-tax revenue, it expects a collection of `8,163 crore, an increase of 20 per cent over previous year, the report states. “We believe both the estimates are over-ambitious, because if we look at the CAGR (compound annual growth rate) in the last five years prior to 2018-19, the growth rate was 10 per cent in tax revenue and 14 per cent in non-tax revenue,” the report added.