Karnataka Budget 2018: Increased taxes as well as a higher deficit

The fiscal deficit is almost near the permitted deficit of 3% of GSDP, up from near about 2.5% - thereby utilising the complete capacity to borrow and then peppering it with taxes for the rest.

H D Kumaraswamy ( Photo | New Indian Express)

Has the Kumaraswamy budget failed the fitness test? It appears like it. In this era of tagging and taunting, Kumaraswamy was challenged and tagged by Yogi, Fadnavis and closer home by Yedyurappa on how the farm distress could be addressed by competitive bids towards loan waivers.

Kumaraswamy bid the highest, in the run-up to the election. As we know in all corporate takeovers, there is a concept of the winners’ curse. Kumaraswamy now has to live the nightmare of the winners’ curse (even without completely winning).

First the loans waivers. This is almost certainly the main reason why he probably presented a fresh budget. While he did not go the full length, he still has slapped a bill of Rs 34,000 crore on the citizens. Given that most of the taxes to be levied are to be decided in the GST council in Delhi, Kumaraswamy has only a few degrees of freedom left. So here goes the list – Fuel – check; Road taxes and cesses – check; Excise – check; Electricity – check.

While we could talk about the merits of the other parts of the budget, this will leave a rather healthy state with a hole that will take substantial time and effort to fill. The fiscal deficit is almost near the permitted deficit of 3% of GSDP, up from near about 2.5% - thereby utilising the complete capacity to borrow and then peppering it with taxes for the rest. It is indeed a fine balancing act, but neither is it in the best interests of the poor (who just lost 2 kg rice from the Anna Bhagya scheme) and the farmers.

In fact, at best this could be termed as a farm-oriented budget. This budget is certainly inflationary in nature. It has a double whammy of increased taxes as well as a higher deficit. And having tasted the blood of once again using petrol and diesel as a solution for all the revenue woes of the local exchequer, we can bid a goodbye to the idea of getting fuel under GST in the near future.

Not only will Kumaraswamy oppose to lose the goose that lays the golden eggs, other chief ministers will also be watching on how to fund their fancies. We are in for tougher times.

Highlights:

• D50 cr for Zero Budget Natural Farming similar to the one being implemented in Telangana
• Use of IT innovations such as using drones to understand crop condition need of watering, cotton plucking among others for which D5 cr is set aside
• As more than 44 lakh coconut trees have withered and become unproductive in Hassan, Tumakuru and other districts, a scheme worth D190 cr has been formulated to safeguard the interests of coconut farmers

Brindavan Gardens at Krishnaraja Sagar will be developed on the lines of Disneyland in US with Public-Private Partnership