Chief Minister BS Yediyurappa presented the 2021-22 budget under an economic scenario that looked quite gloomy with the state having been wracked by the unprecedented pandemic. The revenue receipts have dropped to Rs 15.97 lakh crore from Rs 17.99 lakh, which was expected in the 2020-21 budget. This has led to a complete failure of fiscal targeting with fiscal deficit at Rs 58,300 crore as against the budgeted Rs 46,000 crore, missing the target by 26.7%.
The GSDP was expected to go higher than last year’s Rs 18 lakh crore by Rs 2 lakh crore. But it has gone down to Rs 17.02 lakh crore. Last year, the tax revenue was expected at Rs 1.28 lakh crore, but it has gone down by about Rs 11,000 crore. The situation will be partially redressed through an increased GST compensation and a hike in borrowing, stepping out of the FRBM boundary. The cumulative borrowing has come to Rs 4,57,899 crore, which is quite high for the economy without any strong efforts on the revenue side.
The expectations of MSME, agriculture, social welfare and urban development sectors were to be fulfilled, without resorting to any increase in taxes. All these have put pressure on other sources of revenue, inflating the deficit. The strategy in this budget is to increase investment to boost growth, create employment, focus on women welfare and provide token interventions across sectors. By doing all these, he has overstepped FRBM discipline on the deficit as well as debt-GSDP ratio.
Increasing the revenue should have been the top priority. He has promised to garner total revenues of Rs 1,72,271 crore that comes from tax revenue of Rs 1,24,201 crore and the non-tax revenue of Rs 8,000 crore, with an increment of only a thousand crore. The devolution from the Centre and the grants-in-aid will sum up to Rs 39,000 crore, higher than last year.
The budget, being presented on the International Women’s Day, opened with welfare schemes for women with Rs 37,188 crore allotted to related schemes. The second priority was agriculture and the allocation has reduced to Rs 5.72 lakh crore from Rs 6.12 lakh crore in 2019-20. The rest of the schemes in agriculture are largely the same. The tinkering is with the reduction of market fees from 1.5% to 0.6%.In the overall analysis, even given the fact that this budget was presented under constraints, it has failed in enhancing revenue efforts and depended more on borrowing, devolution from the central pool and pinching allocations across sectors. The promises are quite a few and tall, but efforts do not reach that height.