Karnataka budget 2021: CM BS Yediyurappa's 8th, toughest one yet

Estimated borrowings for next fiscal year set to be higher at 4% of GSDP; Small hike in total outlay likely

Published: 08th March 2021 05:28 AM  |   Last Updated: 08th March 2021 05:28 AM   |  A+A-

CM BS Yediyurappa will present the budget on Monday.

CM BS Yediyurappa will present the budget on Monday.

Express News Service

BENGALURU: At Monday noon, Chief Minister BS Yediyurappa will present his eighth and thus far the most-challenging budget of his career as he lays down his government’s plan for fiscal 2021-22.

Incessant floods, Covid-19 pandemic, lockdown, economic slowdown, and heavy borrowings to offset losses arising out of shortfall in revenue over the last year have worsened the fiscal health of the State that was already precarious. 

In his budget speech last year, Yediyurappa made no secrets of the financial distress Karnataka was in and this time around, matters have only worsened on the fiscal front. Despite these factors, Yediyurappa is confident of his budget being pro-farmer, pro-women and pro-poor.  With fuel prices already skyrocketing, all eyes are on the possible changes to fuel and excise duty in the budget.

ALSO READ | Karnataka budget will be document for development, promises CM BS Yediyurappa

Covid-19 and the challenges it posed to the government is expected to find prominent mention, much like in the case of Union Budget 2021-22. While Karnataka managed additional borrowings for 2020-21 with an amendment to the Karnataka Fiscal Responsibility Act, increased liabilities are set to spill over to corresponding budgets leading to higher revenue expenditure.

The Union Budget allowed an additional 1% for net borrowings of States, which means borrowings for Karnataka could be estimated at 4% of the GSDP instead of the regular 3%. While the fiscal deficit is expected to be up to 5% for the current year, Karnataka has the wriggle room till FY 2023-2024 to return to Fiscal Deficit at 3% as per recommendations of the 15th Finance Commission.  Going by these recommendations and the Union Budget, Karnataka is set to see a reduced allocation from devolution of funds and grants-in-aid from the Centre.

While  Yediyurappa looks to tighten the purse strings on the expenditure front, the Opposition hopes that ongoing works are not tampered with. Lack of funds had put many flagship schemes and notified works on the backburner in the current fiscal year. In 2020-21, Yediyurappa had attempted to reduce expenditure by clubbing departments under umbrella sectors, a similar attempt is expected this time around as well. The budget size for 2020-21 was Rs 2,37,893 crore. A very small hike over and above this is  expected in budget 2021-22.

Day’s schedule

The CM will hold a meeting of ministers at 11 am at Vidhana Soudha to seek the Cabinet’s approval for the budget document. At 12.05 pm, he will start reading the Budget on the floor of the House 


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