BENGALURU: All eyes are on the state budget to be presented by Chief Minister Siddaramaiah on July 7 as his government has to make additional allocation to implement its five guarantees. The state government needs about Rs 59,000 crore per annum to implement the promised guarantees.
Siddaramaiah held a meeting with top finance officials, including LK Atheeq and Ekroop Kaur, here on Tuesday where issues related to mobilisation of funds were discussed threadbare.
Former Additional Chief Secretary (Finance) ISN Prasad said the team from the finance department is still working out ways to mobilise resources to implement the guarantees. The CM is expected to make a decision soon.
Speaking about the guarantees and the burden on the government, renowned economist and former member of the 14th Finance Commission Prof Govinda Rao said, “The issue is not as serious as it is made out to be. There are two ways to deal with it. First, the GST system is buoyant and the government will be able to generate substantial revenues, and added to this, there is the source of tax devolution, which is also higher. The other way of dealing with the issue is that there is half percent borrowing space available. For example, the fiscal deficit now is 2.5% and there is a chance or opportunity to borrow up to 3%. So, this is an additional cushion."
Asked if these were the only two options, he said, “Another way of dealing with severe revenue crunches is to sell or lease state’s assets. For example, Karnataka has assets such as Mayura hotels which could be leased. Some prime properties could also be sold to overcome the revenue deficit.”
‘Have met target for first quarter’
Economist Prof RS Deshpande said, “This is a critical time budget. The economy is okay now. But the government has these commitments. Now, there are five guarantees and I am for them. The finance management shouldn’t create unnecessary deficits or debts. One solution could be to step up revenue mobilisation through increasing stamps and registration fees and entertainment tax. The entertainment tax in the state is 30% and this could be increased to about 50 or 60% like in other states.’’
He said another source of revenue collection could be from the real estate sector. On GST collection, Commercial Tax State Commissioner C Shikha said, “We have met the target given to us for GST collection in the first quarter.
There is a growth rate of about 20% compared to the same quarter last year. This is due to good compliance by taxpayers and actions taken by the government.’’ She said various measures have been taken to ramp up commercial tax collection and additional revenue mobilisation.