With Legislative Assembly elections just a year away, Chief Minister Basavaraj Bommai, who will be presenting his maiden State Budget for 2022-23 on Friday, is unlikely to levy fresh taxes or hike the existing taxes/duties on fuel, essential commodities and liquor.
Two years of pandemic-linked economic slowdown has led to much suffering for the common man. Now, with the overall, rebound and recovery of the State economy, for the first time, the total size of the Budget is expected to cross ₹2.5 lakh crore.
The capital expenditure is likely to witness a sharp jump by focussing on infrastructure development, including irrigation, agro-processing and roads.
Collection of taxes
Collection of taxes during 2021-22 is expected to surpass targets. As of December, 2021, revenue receipts were recorded at ₹1,29,544 crore against the budget estimate (BE) of ₹1,72,402 crore in 2021-22, a growth of 21.87% against the previous year.
Till January, 2022, goods and services tax, Karnataka sales tax and professional tax have already generated revenue of ₹83,114.34 crore against the last year’s (2021-22) revenue of ₹82,461.71 crore. Excise duty from the sale of beer and Indian Made Liquor recorded is at ₹23,274 crore against the target of ₹24,580 crore with still a month to go in this fiscal year.
Showcasing development
The country is marking ‘Azadi ka Amrit Mahotsav’ and eleven (11) Amrit schemes, which are largely seen as people-centric, announced by Mr. Bommai during the last Independence Day, will get more funds. The Budget is expected to announce some incremental steps for developing rural and urban infrastructure to showcase development.
It is expected to offer concessions to small businesses/industrial units for resumption of economic activities. Programmes under the Atma Nirbhar Bharat and PM Gati Shakti which have adopted a transformative approach for economic growth and sustainable development, are expected to get a boost.
Regional distribution
With Bengaluru’s civic body (BBMP) likely to go to polls soon, Bengaluru, which is contributing to more than 60% of the State’s revenue, is expected to get huge funds for infrastructure development, including drinking water, metro rail and roads.
The Kalyana Karnataka region legislators have been seeking higher allocations and the region is expected to get a good number of projects of over ₹3,000 crore. The Budget is likely to focus on SCs/STs and a few smaller communities.
The Chief Minister has promised to give priority to women’s welfare. A large number of women working as Anganwadi and ASHA workers, who played a critical role in containment of COVID-19, are expected to get a hike in allowances.
Some of the recommendations made by the Administrative Reforms Commission headed by former chief secretary Vijay Bhaskar are also expected to find a place in the Budget to contain non-development expenditure.
More borrowings
The government has not been able to contain committed expenditure owing to interest payments on borrowings and salary of its employees and pensions/subsidies/scholarships. To overcome the shortfall, the government is expected to raise borrowings from various institutions, including NABARD.
The State can also take advantage of borrowing under the PM Gati Shakti master plan. The Centre has proposed 50-year, interest-free loans of Rs one lakh crore to the states to help them to attract investments in 2022-23. These loans are over and above normal borrowings to the states.
However, as of December 2021, the government borrowed only 58.86% of the loans (₹41,984 crore) against the BE of ₹71,332 crore for 2021-22 and this largely indicates the fiscal discipline maintained by the government, an expert said.
