BENAGALURU: The Karnataka Economic Survey 2023-24 released on Friday cautioned against the trend of increase in government expenditure and decline in revenue collection.
“The state has better fiscal conditions through prioritising expenditures as well as improving revenue collections. This has implications for the fiscal position of the state. However, with the increasing government expenditure and declining government revenues, keeping the fiscal deficit at a low is challenging,” the survey stated.
However, Karnataka managed to contain the fiscal deficit to 2.8% of GSDP in 2022-23 (revised estimate) and further, for 2023-24 (budget estimate), the fiscal deficit has been targeted at 2.6%, which is lesser than in the previous year.
But as claimed by Siddaramaiah in his budget, the fiscal deficit is at 2.95% which is close to the limit of 3% of the GSDP as per the Fiscal Responsibility and Budget Management (FRBM) Act. In the survey, it is stated that in 2023-24, budget programmes have been formulated for the overall development of the state by achieving higher economic development and maintaining fiscal discipline.
As per Advance Estimates of 2022-23, the GDP growth rate of India is estimated at 7%, whereas GSDP growth rate for Karnataka is estimated at 7.9%. “In nominal terms, the GSDP growth rate of Karnataka is estimated at 14.2% whereas for all-India, growth rate is 15.4%,” it stated.
The survey indicated the increasing trend of non-development expenditure which was at 27.26% (Rs 19,344.94 crore) in 2010-11 as against development expenditure of 72.74% (Rs 51,626 crore). It is being hiked to 34.46% at Rs 1,12,936.47 crores as against development expenditure of 65.54% at Rs 2,14,810.12 crore in 2023-24 budget estimate. The trend has been attributed by the experts due to the government’s failure in taking austerity measures.
The Opposition, especially JDS of former CM H D Kumaraswamy, had also raised the issue of the incumbent government creating posts with cabinet rank to placate the ruling Congress members. It had set a wrong precedent that may prove a burden on the state’s exchequer given the salaries and the perks involved. The BJP has criticised the government for creating the posts for the Congress workers to monitor the implementation of the government’s five guarantees.
“If the trend of increase in non-development and government expenditure prevails, it may result in the fiscal deficit going up. Which is why the government is unlikely to fill up the vacancies as it may further add to the expenditure,” remarked an expert. The survey did not analyse the financial implications of the five guarantees. “The Gruha Lakshmi scheme will play a prominent role in easing the daily financial pressures and ensuring the economic empowerment of women,” it said.