Karnataka budget 2020: Yediyurappa presents surplus budget despite revenue shortfall
BENGALURU: If there were any doubts that Karnataka is reeling under severe financial distress, Chief Minister B S Yediyurappa’s budget speech on Thursday only confirmed it all. The total budget outlay of Rs 2,37,893 crore is Rs 3,740 crore, or just 1.6% higher than the 2019-2020 budget.
Despite his intent to prioritise farmer welfare through agriculture and irrigation projects, Yediyurappa said he was compelled to cut down the expenditure of many departments owing to fund crunch. Tax on petrol and diesel was hiked by 3% each while excise duty was hiked by 6 per cent. Petrol will be dearer by Rs 1.60 per litre and diesel by Rs 1.59. Stamp duty on first-time registration of flats, however, has been reduced by 3%.
“The state’s share in central taxes has come down in 2019-2020 as per the revised budget estimates of the Central Government. Due to this, there is a reduction of Rs 8,887 crore to Karnataka. Hence, the state’s revenue resources have reduced. Apart from this, Rs 3,000 crore in GST compensation will also be reduced as collections from the GST compensation cess is not as expected,” Yediyurappa said, highlighting the financial constraints.
He, however, tried to make up for it by announcing innovative steps like smart mobility plans, green index and the first child budget. Instead of announcing schemes and allocating funds to each department, the CM chose to club multiple departments under ‘umbrella sectors’.
For example, Social Welfare, Minority Welfare, Backward Classes Welfare, Health, Education, Women and Child Welfare departments were clubbed together under ‘Welfare and Inclusive growth’. The move is, perhaps, aimed at downplaying the cut in funds for departments. The state has cut down subsidies to 7 out of 12 departments while increasing it for four departments — Home and Transport, Cooperation, Commerce & Industries and Power.
“Governments of the same party at the State and Centre will give Karnataka double benefits,” was the BJP’s poll pitch during the December 2019 bypolls. That claim came crashing on Thursday with Yediyurappa pointing fingers at a reduction in central funds as key reasons for the State’s financial struggle. The total reduction in Central funds to the State stands at a whopping Rs 11,887 crore for the 2019-2020 fiscal. Despite the fiscal challenges, the CM presented a budget adhering to Karnataka Fiscal Responsibility Act with an estimated revenue surplus of Rs 143 crore, fiscal deficit at 2.55% and liabilities of Rs 3,68,692 crore at 20.42% of GDP.
Out of the budget, Rs 32,259 crore has been allocated for agricultural and allied activities that include water resources, horticulture, sericulture, fisheries, etc. The largest allocation of Rs 5,000 crore under this sector has been set aside for lift irrigation projects with no details of target regions. The budget also makes no mention of the farm loan waiver that was announced in the 2019- 2020 budget by H D Kumaraswamy as a phased five-year plan.
Yediyurappa, however, announced waiver of interest on medium- and long-term loans for purchase of farm equipment at the cost of Rs 466 crore to benefit 92,000 farmers. Reducing allocation for Food and Civil Supplies department from Rs 4,001 crore last year to Rs 2,668 crore has raised concerns over tampering with the widely popular Anna Bhagya scheme.
Minority welfare barely sees mention in the budget with just Rs 1 crore set aside for English medium of instruction in 700 Urdu schools. Allocation of Rs 200 crore was made for comprehensive development of the Christian community, which had been in cold storage for three years.
Share of tax to dip further
In 2020-2021, Karnataka’s share in Central taxes will reduce by Rs 11,215 crore as per the 15th Finance Commission recommendation The Gross State Domestic Product (GSDP) too has fallen by 1 per cent from the 2018-19 fiscal, stalling the growth rate at 6.8% for 2019-2020.
First state to unveil Green Index
The Green Index will be made an integral aspect of formulating policies and guidelines to ensure climate change is tackled in a better manner. Karnataka is the first state to bring in such a concept. To start with, 20 departments will introduce the green index.
Rs 8,772 crore for B’luru development
Recognising Bengaluru as the key driver of the state’s economy, the CM mooted proposals to ease the city’s notorious traffic congestion by promoting public transport system.“A total of Rs 8,772 crore is provided for Bengaluru development sector,” the CM said.
Shivamogga has reason to smile
The CM’s home district got a big fillip in the budget with funds to construct a campus for University of Agricultural and Horticultural Sciences, traditional tribal medicine research centre, Rs 6.25 crore for a monkey park, Rs 5 crore for upgrading the Tyavarekoppa tiger and lion safari, and 50% of cost sharing for Shivamogga-Shikaripura-Ranebennur railway line