MYSURU: As the countdown begins for Chief Minister Siddaramaiah’s 14th budget as Finance Minister, all eyes are on the veteran leader’s moves to fulfil the guarantees made to the people and also show financial prudence. Though Siddaramaiah is known to have a good understanding of the economy, it could prove to be the toughest budget yet of his political career. Leading the Congress election charge, he had not had much freedom as the party, in its anxiety to win elections, made a series of populist announcements, and handed him a blueprint which he now has to deliver.
But the government, in a hurry to deliver on the five promises and set the tone in other poll-bound states, cannot afford to neglect core areas like irrigation, infrastructure, roads, agriculture, power, and other areas. It would give the Opposition room to allege that development has taken a backseat because of the party’s political agenda. The state government’s finances, that had suffered due to the pandemic in the past three years, may further come under strain if the weather gods are not kind.
Any further delay in the monsoon could end in a drought-like situation, forcing the state to come up with a plan to address it. In the federal structure, the state has limited resources, and it’s difficult to mobilise resources other than increasing excise duty, stamp duty and power tariff. It has to look to the Centre or RBI for borrowing. However, if the Centre continues to deny rice or tighten its purse, it could push Karnataka into further trouble as it is bound to its promises, and also has to adhere to the Fiscal Responsibility & Budget Management Act. Relying on debt borrowing to fulfil the party’s promises may provide ammunition to the Opposition and draw public attention to poor fiscal management.
The state cannot increase taxes or further burden the people as it hopes to keep alive the feel-good factor in the run-up to Lok Sabha elections, and is keen to use the anti-incumbency factor against the BJP in the panchayat and parliamentary elections.
Karnataka is considered a progressive and prosperous state which attracts good foreign investment, and will take care of development, and there is no need for the state to invest its own resources. Noted economist Prof C K Renukarya observed that it is difficult to mobilise Rs 60,000 crore to implement the promises, as it will have its own implications on the economy in the long run.
However, he said the government ensuring food security is a welcome move and though Karnataka is a strong, progressive state, one has to foresee the problems and consequences of implementing freebies. Prof Basavaraju said Karnataka’s finances are not in good shape and CM Siddaramaiah, who knows the art of management, will try to implement his promises. He said the state has no scope for alternatives other than loans to meet the requirement of Rs 60,000 crore for its populous programmes.