Nirmala's financial aid good, but will Karnataka gain?: Experts ask

Karnataka Pradesh Congress Committee president D K Shivakumar said the package will succeed only if banks cooperate.

Published: 29th June 2021 05:45 AM  |   Last Updated: 29th June 2021 05:45 AM   |  A+A-

Union Finance minister Nirmala Sitharaman addresses the media. (Photo | EPS/Shekhar Yadav)

By Express News Service

BENGALURU: On the fresh financial package announced by Union Finance Minister Nirmala Sitharaman on Monday, former Director of ISEC, Prof R S Deshpande, said, “It is a well-thought-out initiative. The public health sector in smaller towns requires more funds and the amount allocated is welcome.”

He said, “If we look at all the states, Karnataka falls in the middle of the chart and we will gain more than most states that are below us. But borrowing needs to be paid back… it should not become a trap. I don’t know what will be our actual gain. It lacks clarity in the nitty gritty. Three things will benefit Karnataka. One, we will get a better borrowing facility. Two, we will get some benefits in tourism, because our tourism sector is already quite strong. Three, we will get some benefits for MSMEs, since Karnataka is among the top five in the sector. Already, 1.56 lakh gram panchayats are connected under the Bharat Net scheme and the remaining one lakh need to be linked. We may not gain much in this.”

Prof Sankarshan Basu of IIMB said, “Will Karnataka benefit from it? Assuming an equitable distribution of sops, it seems yes. But as it has been observed in the past, political events and elections have a significantly large impact on such allocations and distributions. There is no major political event like an election in the near future in Karnataka, so that could be a challenge as chances are that states like Uttar Pradesh and Uttarakhand may be given priority.’’

He added, “The sops announced by the Finance Minister today are a step in the right direction. But two large questions loom; One, is it too little too late and therefore how much of an impact will it have; and two, where will the government fund it from? Does the government go in for fiscal enhancement… not necessarily a bad idea. In fact, many would argue that it is a need of the time, but in that case the government has to be careful of fiscal profligacy going forward.”

Karnataka Pradesh Congress Committee president D K Shivakumar said the package will succeed only if banks cooperate. “The Central Government announced a Rs 20 lakh-crore package 13 months ago, but who did it help? The government needs to help those who have lost everything.’’FKCCI president Perikal Sundar said, “We welcome the proposals in the new stimulus package. It was much needed. It has to percolate to the level of banks and individual branches, only then it will serve the purpose.”


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