This year’s budget created some interesting expectations. The opposition was up in arms about the alleged fiscal difficulties the state will confront in implementing the five guarantees. However, belying all their expectations, the budget was prepared craftily and prudently by the chief minister and the Finance Department.
While presenting the budget with total revenue receipts at Rs 238.4 thousand crore, of which 73.7% came from own tax efforts and 5.24% from non-tax revenues reveals substantial thinking, in which on one side there was no increase in the tax burden heavily and on the other a rationale cut on expenditure was brought in, ensuring welfare. This includes additional revenue of Rs 11,000 crore from the state’s own taxes (Rs 1,75,652 crore against Rs 1,64,652 crore BE) and Rs 1,500 crore from non-tax revenues. The budget has heavily relied on its own tax revenue, garnering a positive atmosphere of better growth performance and utilising hitherto low-taxed sectors for increasing taxes and duties.
Effectively, the chief minister has chosen excise and stamps and registration for generating revenues. A substantial increase comes from excise duty (Rs 36,000 crore), stamps and registration (Rs 25,000 crore) and expenditure squeezing on a few items that include agriculture, overall subsidy and frills at many other places.
The devolution from the 15th Finance Commission and total grant-in-aid is Rs 13,000 crore along with Rs 37,000 crore of the state’s share in the central taxes that includes GST.
This would amount to Rs 50,000 crore resources from the Centre. Besides, the state will borrow public debt of about Rs 85,000 crore which is about Rs 19,000 crore higher than the budget estimate of 2022-23. With these basic revenue efforts, the CM has put the total receipts at Rs 238.09 thousand crore during 2023-24. He has articulately managed the deficit and expenditure with total expenditure at Rs 305.3 thousand crore. This will result in a revenue deficit of Rs 12,522 crore. Fiscal experts expected the deficit this year to be in the neighbourhood of the expenditure committed on the five guarantees, but the CM has managed to hoodwink these expectations.
Finally, this budget was presented in the shadow of difficulties and that gets reflected in the deficit, but not to the extent predicted. In the 2022-23 (February) budget, the then chief minister Basavaraj Bommai maintained a revenue surplus of Rs 402 crore, but in this budget, it is expected to be at Rs 2,523 crore, almost 5.25% of total revenue, or 0.49% of GSDP. The fiscal deficit which was Rs 60,581 crore in the earlier budget has risen to Rs 66,646 crore, which is 2.6 % of GSDP and 27.9% of total revenue receipts.
Ratio of Fiscal Deficit is certainly well within FRBM norms of below 3% of the GSDP. Given the narrow lanes of the economic manoeuvring flocked with difficulties that included the election promises, difficulties in increasing state taxes and ensuing corporation elections but still maintaining the FRBM norm was a difficult task that was achieved by the budget. We must call it prudent fiscal management.