Karnataka Budget could’ve tapped more revenue sources: Expert

After the rude shock of the pandemic, the Indian economy suffered significantly in terms of growth, employment and loss of human life, and Karnataka was no exception.
Karnataka Budget could’ve tapped more revenue sources: Expert

After the rude shock of the pandemic, the Indian economy suffered significantly in terms of growth, employment and loss of human life, and Karnataka was no exception. Even then, the state could resurrect and get on to stable path of growth with GSDP recording 9.5% growth, contributed by agriculture (2.2%), industry (7.4%) and services (9.2%).

Usually, the Economic Survey precedes the budget, but this time, it happened simultaneously. There is an uneasy feeling that there may be efforts missing on the revenue side, with budgeted revenue put at Rs 189.9,000 crore. This is just marginally (0.16%) ahead of the revised estimate for 2021-22. At the same time, the intended expenditure is Rs 204.58 crore, 4.48% higher than last year. The revenue from state taxes is estimated at Rs 131.88 crore, almost Rs 5,000 crore less than the 2021-22 estimate.

What was the reason behind this? Have new tax avenues dried up? Tobacco products and the stamp duties could have been tapped, besides some disinvestment. In the pre-budget discussions, eyebrows were raised about the accumulated debt and borrowings. This year, the borrowing was 27% of the total revenue, as against 29% in the 2021-22 estimate. This was feasible due to increased share of grants and taxes from the Central Government.

In his budget speech, the CM emphasised on triple ‘E’ — Education, Employment, and Empowerment. Inclusive development seems to be the byline of arguments in the budget. The allocation for education is pegged at Rs 31,980 crore, higher than the previous budget. The CM also incorporated allocation for the Mekedatu project on popular demand. The new textile park and good infrastructure development funds for Bengaluru for skywalks, railway corridor and new housing projects will help create employment.

On the capital account side, the situation could be balanced only because of the open market borrowing of Rs 67.91,000 crore. This is besides the Centre’s grant and borrowings from institutional sources. With all these adjustments, the CM could peg the revenue deficit at Rs 14.69,000 crore, higher than the revised budget estimate of last year.

On the flip side, revenue sources like cigarettes and tobacco products have not been properly tapped. Secondly, the allocations are not focused therefore, many schemes may not yield immediate results. Third, the important issue of rural workforce migrating to urban areas and causing stress on the economy, is not attended to. This could have been done with focus on rural industrialisation. Lastly, it is high time that North Karnataka gets investment boost in terms of industries. These may act as catalysts of development.

Prof R S Deshpande
Visiting Professor, ISEC, Nanjundappa Chair Professor CMDR, ICSSR National Fellow

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