Karntaka Budget: Short of funds, Yediyurappa raises tax on liquor, fuel

Yediyurappa said Karnataka is set to lose nearly ₹8,887 crore in its share of Central taxes

Karnataka Chief Minister BS Yediyurappa before presenting the State Budget 2020-21 at Karnataka Assembly in Bengaluru. Photo: PTI

Karnataka Chief Minister B S Yediyurappa, who also holds the finance portfolio, presented his fifth budget as the Chief Minister on Thursday (March 5). Amid a shortage of funds, the budget gave importance to agriculture, Bengaluru’s infrastructure, and irrigation projects but with a reduction in the share of funds compared to last fiscal.

Even as the Chief Minister highlighted the shortfall in funds with the reduced allotment of funds from the Centre, Yediyurappa said the state is set to lose nearly ₹8,887 crore in its share of Central taxes and another ₹3,000 crore reduction in GST compensation.

“It has become difficult to reach the 2019-20 budget targets due to these reasons… an inevitable situation has risen this year to cut down the expenditure of many departments,” the CM said.

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But despite the fiscal challenges, the chief minister presented a budget with a revenue surplus of ₹143 crore.

Agriculture

Thought Yediyurappa failed to impress farmers with any new schemes, the chief minister announced additional assistance of ₹4,000 along with the ₹6,000 given to small and marginal farmers by the Central government under the “Pradhan Mantri Kisan Samman Scheme”. The CM set aside ₹2,600 crore for the scheme.

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Besides, he also said the state would introduce mobile “agricultural health clinics” for soil testing, water testing, and other kinds of technical assistance in farming. These mobile clinics are expected take farming services to the doorstep of farmers.

The chief minister also laid emphasis on drought-resistant crops by announcing an incentive of ₹10,000 per hectare (max up to ₹20,000) for farmers who grow important millet crops.

Bangalore’s infrastructure

The rebel MLAs from Congress and JD(S) who won and became ministers in the BJP cabinet always eyed the Bengaluru development portfolio, considering the big chunk of funds it gets. Yediyurappa, in fact, reallocated the portfolio within 24 hours as one of the MLAs was not given the said portfolio.

The CM announced that a twin-towers building with 25 floors each will be constructed in Anand Rao Circle in Bengaluru at a cost of ₹400 crore to facilitate the working of all governmental departments in one location.

He allocated ₹500 crore for implementing the much-awaited suburban rail project. Besides, the CM also said the state would be purchasing 1,500 diesel buses at an expenditure of ₹600 crore to cater to the increasing population in Bengaluru. For this, the government will provide ₹100 crore every year for a period of seven years.

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Yediyurappa earmarked ₹25 crore to provide free monthly bus passes to one lakh women labourers working in garment factories.

He allocated ₹317 crore for lake development and an additional ₹100 crore for a comprehensive development plan to get rid of lake encroachments and sewer pollution in lakes.

Bending to the demands of the film industry, Yediyurappa announced that they would set aside ₹500 crore to set up a film city of global standards in Karnataka.

Drinking water projects

The budget also set aside ₹1,500 crore for “Yettinahole Project” to provide drinking water to the districts of Hassan, Chikkamagaluru, Tumakuru, Bengaluru Rural, Ramanagara, Chikkaballapura, and Kolar.

Following the Supreme Court’s dismissal of the Goa government’s plea against the Kalasa Banduri project, the Karnataka government allocated ₹500 crore for the project. The long-awaited project aims to lift water from Goa’s Mahadayi river and supply it to the parched districts of North Karnataka.

The budget also witnessed a reduction in the allocation for women and child welfare department, food and civil supplies, the welfare of scheduled castes and scheduled tribes, compared to previous budget estimates.

To offset the estimated drop in taxes and central funds, the chief minister increased excise duty and tax on petrol and diesel.

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Chief Minister B S Yediyurappa announced that the tax on petrol would be increased from 32 per cent to 35 per cent and diesel from 21 per cent to 24 per cent. It would make petrol and diesel more expensive by ₹1.60 and ₹1.59 per litre respectively.

With Karnataka being one of the largest markets for liquor consumption in India, the excise duty on India-made liquor has been increased by 6 per cent across 18 slabs.

Opposition Congress, which lauded the CM for acknowledging that the Centre “cheated” the state by way of lesser allocation, said the budget was neither welfare-oriented and nor farmer-focused as the CM had stated before.

Opposition leader Siddaramaiah said in Bengaluru that the budget failed to address issues of minorities, and development on the whole. “The budget lacks vision as the government has failed to identify its priorities,” he said.

Meanwhile, former deputy chief minister and Congress MLA G Parameshwara said, “BJP fooled and cheated the people of our state saying Karnataka will benefit from having the same party both at state and Centre. The Modi-led central government has punished Karnataka.”

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