Karnataka Budget: Bommai heaps voter with schemes ahead of polls

The ₹3.1 lakh-crore revenue-surplus Budget announced by the Basavaraj Bommai government in Karnataka has attempted to kill two birds with one stone – make the common man happy, especially with the Assembly polls in sight, and curry flavour with the BJP high command in New Delhi.

Bommai, who presented the Budget in the Assembly on Friday, barely 100 days ahead of the state polls, didn’t raise taxes; instead, he announced schemes for diverse sections of society including farmers, women and the downtrodden classes. However, he stressed on the importance of collecting revenue through commercial taxes, stamps and registration, excise, transport, mines and geology.

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A ₹3.09 lakh-crore, this is the first time the Budget outlay has crossed the ₹3 lakh-crore-mark; it was ₹2.65 lakh-crore in 2022-23. The fiscal deficit, estimated at ₹60,581 crore, is 2.6 per cent of the gross state domestic product (GSDP). While the state is expected to borrow ₹77,750 crore, the liabilities at the end of 2023-24 are estimated at ₹5.64 lakh-crore, or 24.2 per cent of the GSDP.

Bommai tries to make bosses happy

Analysts say Bommai’s Budget speech —  which had references to the BJP’s “double-engine government” (at the state and the Centre), and bore similarities to the Union Budget presented by Finance Minister Nirmala Sitharaman earlier this month — besides trying to woo voters, appeared to appease the BJP bosses too.

Praising the Centre’s efforts to pull back the economy from the COVID crisis, Bommai said: “It is significant that India has achieved economic growth at 6.5 per cent as a result of several steps taken by Prime Minister Narendra Modi for financial stability at a time while several countries in the world are caught in financial distress.”

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He said he is presenting the Budget with the vision of responsibilities, targets and results for the next 25 years of Amrit Kaal (also mentioned in the Union Budget).

Making a case for the BJP’s ‘double-engine government,’ he said the Centre has been continuously supporting the economy of the state, and that various projects in the state bear testimony to the same.

Bommai said his government envisions making Karnataka a $1 trillion economy. This, analysts say, sounded like a duplication of Sitharaman’s statement to make India a $5 trillion economy.

Budget’s fate rests on next CM

The fate of the Budget technically rests on the next chief minister as currently the expenditure would be allowed only for four months till the Bommai government is in power. 

However, there will be no obstacle in the continuation of the Budget if Bommai returns to power. For instance, Siddaramaiah presented his Budget after forming government in 2013 even though Jagadish Shettar had tabled the same a few months before the Assembly elections. 

Similarly, JD(U)’s HD Kumaraswamy presented a different budget in 2018 even though Siddaramaiah presented his election Budget a few months before the Assembly elections the same year.

‘People-friendly Budget’

Bommai has targeted significant sections of the society in his Budget. Abdul Kalam residential schools for students from minority communities, Narayana Guru-Kanakadasa residential schools for those from backward sections, ‘Shi’ restrooms for women in public places, buses for children, artificial intelligence signals to end Bengaluru’s traffic problems, interest-free loan up to ₹5 lakh per head for farmers, a stipend of ₹1,500 per month for boys and girls from marginalised backgrounds pursuing vocational training, are among the key announcements. 

Experts say the record revenue generation by the state government has given it confidence to announce new schemes. While the revenue target for 2022-23 was ₹1.32 lakh-crore, the government was able to rake in a surplus of ₹1.6 lakh-crore.

However, to implement the new schemes, the government will also have to depend on state non-tax revenue (4 per cent), state tax (54 per cent), grants from the Central government (4 per cent), and a share of central taxes (12 per cent). The balance 26 per cent (₹77,750 crore) will be borrowed from different sources.

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This will raise the current debt of ₹5.4 lakh-crore to ₹6 lakh-crore. The state’s debt increased from ₹2.4 lakh-crore to ₹5.4 lakh-crore between 2018 and 2023. It has to pay around ₹14,000 crore as the principal amount and ₹35,000 crore as interest.

Though the 14th Finance Commission decreased Karnataka’s share of grants in aid from 4.71 per cent to 3.65 per cent, the surplus revenue generation is in a way helping the state.

Experts, however, say that this will have an adverse effect as the Budget did not go for decreasing the debt and liabilities. As the new government will be taking charge in May, it has to take the burden of these liabilities.