The Congress government in Karnataka is settling down as quickly as it can. It has made decent progress with the five big welfare guarantees it made during the assembly elections. The inclusive and representational victory that the party achieved had brought pressure on it to roll out the guarantees, not in phases, not in parts, but in their entirety. What that entirety is, became a matter of interpretation after the polls.
Instead of emotionally rushing to fulfil the welfare promises, Chief Minister Siddaramaiah paused like a seasoned administrator, took a hard look at the coffers, and cautiously moved ahead by introducing certain conditionalities. Given his past experience in handling the finance portfolio, one can be sure that he fully understands what he has committed his government to do. After having become chief minister for a second time and having declared that what just got over was his last election, there is no basis to suspect that he functions with an after-me-the-deluge attitude regarding the state’s finances. He may be looking for a legacy.
The total cost to the exchequer from the five welfare schemes is rather hazy. It is variously pegged between Rs. 50,000 crores and Rs. 1 lakh crores per annum. To offer some perspective, the total size of the Karnataka budget is around Rs 3 lakh crores. Even as speculation has run wild, the government has not clarified the total figure because it does not have a final figure. It will be known only after payments hit the accounts of beneficiaries and after all concessions and losses are fully accounted for.
The post facto conditionalities introduced by the government are a giveaway of the tight fiscal situation that the guarantees may have created. For instance, the government has restricted the unemployment dole to only those who remained unemployed in the academic year 2022-23. Also, when a dole is meant to sustain someone, it is difficult to explain why the Congress stratified the unemployed by saying degree holders will get Rs. 3000 a month, while diploma holders will get half of it. It is not that diploma holders are eligible for a special discount with grocers or vegetable vendors.
Next, on the 200 units’ free electricity guarantee, they have introduced a complicated calculation of averages, which is bound to create hyperlocal disputes and tensions. Meanwhile, the government has nowhere said it will keep the electricity price static. Given the poor financial condition of the electricity boards, it may be compelled to go for a hike sooner than later to tide over the old and new losses.
There is an implication for employee morale too. In fact, in the previous Bommai government, the finance department, in December 2022, had shot down a proposal to increase the wages of employees in the power transmission corporation. It had argued that a wage hike may eventually lead to a hike in power prices and burden consumers.
The case of the bus guarantees is no less complicated. It not only affects the revenues of the five bus corporations that are already under strain. According to one estimate presented to the chief minister, to satisfy the demand for free travel, the corporations will have to purchase 4028 new buses. To manage these new buses, they may need around 13,000 new employees. If one adds the fluctuating diesel prices, a very gloomy picture emerges.
As regards the free rice guarantee of 10 kgs, if 5 kgs are assured from the central pool, the state will have to purchase the rest at a minimum support price. The calculation is it will roughly need Rs 850 crore every month. That is nearly Rs 10,000 crore per annum. The inflation dole of Rs 2000 for women is yet another humungous challenge, both fiscally and socially, in a patriarchal set-up. Here again, if it is an Aadhaar-linked cash transfer scheme, a recent document presented before the government said there were nearly 37,000 bogus Aadhaar cards that had led to duplication of benefits.
If the five guarantees should not tie down the government to constantly measure its equilibrium and watch its back; if it should not lead them to irrational taxation and price hikes in other sectors, thereby making the guarantees a zero-sum game, then there is a splendid solution to ease the financial stress of the Congress government.
Chief Minister Siddaramaiah has only to jog his memory and recall an announcement, a kind of guarantee he made in 2013 when he came to power. He had undertaken a padayatra to Bellary and had assured that if he came to power, he would mercilessly recover losses the mining companies had caused to the state exchequer.
Siddaramaiah had promised to take the very credible Lokayukta report on illegal mining forward. The Justice Santosh Hegde-led organisation had estimated that nearly 3 crore tonnes of illegal ore had been transported out of the state, and the loss accrued to Rs 12,228 crore.
Initially, to keep this promise, Siddaramaiah had set up a cabinet sub-committee under senior minister HK Patil. The committee which went into the mining scam felt that the Lokayukta report had underestimated the losses. It said if the railway department’s figures were also collated, the loss was around 35 crore tonnes. Now, if a per tonne rate of Rs 4103 (Lokayukta figure) is applied to 35 crore tonnes, then the estimated loss to the Karnataka government would jump dramatically to over Rs 1.43 lakh crore. This has to be mercilessly collected.
After the initial enthusiasm and rhetoric in 2013, the Siddaramaiah government forgot the findings of its own cabinet sub-committee. They never spoke about it in the years they remained in power till 2018. Since Siddaramaiah is now back, he has to simply recall his 2013 guarantee to fulfil his 2023 guarantees. This will test his political will and moral ability to keep his word.
The man at the centre of the mining scam a decade ago, G Janardhana Reddy, has entered the state assembly this time and may serve as a constant reminder to recover mining money. If Siddaramaiah had acted in 2013 Reddy perhaps wouldn’t be in the Assembly. HK Patil, too, is back in the cabinet, and he can place his calculation again on the table.
Sugata Srinivasaraju
Senior journalist and author
(sugata@sugataraju.in)