Karnataka Chief Minister Siddaramaiah presented his 14th State budget on July 7. He presented a budget with a total outlay of ₹3,27,747 crore, up from ₹3,09,182 crore in the budget presented by former chief minister Basavaraj Bommai in February 2023, for the same fiscal year (2023-24).
While the budget presented by Mr. Bommai before the Assembly elections did not impose any new tax, the budget presented by Mr Siddaramaiah on July 7 has increased the Additional Excise Duty on Indian Made Liquor by 20%, and on beer by 5.71%, proposes to revise guidance value of properties across Karnataka, and sets a higher revenue target from stamp duty and registration, and proposes that the tax on certain vehicle categories will be revised, apart from setting high revenue targets for all departments to mobilise resources.
This is probably to make room for the ₹52,000 crore earmarked for implementation of the five guarantee schemes of the Congress.
Defending the schemes, Mr. Siddaramaiah said these schemes will reach about 1.30 crore families. “This means, we will be providing, on an average, additional financial assistance ranging from ₹4,000 to ₹5,000 monthly to each household. The objective is to provide a universal basic income, a first such initiative in India,” Mr Siddaramaiah said in his budget speech.
He appealed to opposition parties ‘not to insult the wisdom of the common people’ in choosing the Congress, by criticising the guarantee schemes as ‘mere freebies’.
Impact of guarantee schemes of Congress on capital expenditure of Karnataka
The schemes seems to have hit capital expenditure of Karnataka. Of the total expenditure, ₹2,50,933 crore will be spent on revenue expenditure, ₹54,374 crore on capital expenditure, and ₹22,441 crore for loan repayment.
As compared to the budget presented by Mr. Bommai, revenue expenditure has ballooned, and capital expenditure has shrunk significantly. In the BJP’s budget, revenue expenditure was pegged at ₹2,25,507 crore, and capital expenditure at ₹61,234 crore.
Chief Minister Siddaramaiah said, “In the current year, we will rejuvenate the economy of the State through higher capital investments and direct cash transfer...”
However, elsewhere in the budget, he blamed ‘fiscal indiscipline’ of the previous BJP government for shortage of funds to take up new projects.
“The previous government had given approval to a huge number of projects in major departments with scant regard to the principles of fiscal discipline… As of the end of 2022-23, a total of ₹2,55,102 crore works are pending, and it requires nearly six years to complete these projects. The huge balance cost of works left over by the previous government has posed a major challenge to our government in taking up new projects,” he said in his budget speech.
The budget speech doesn’t disclose the fiscal deficit and liabilities of Karnataka at the end of the fiscal year, and whether they meet the restrictions placed by Karnataka Fiscal Responsibility Act, 2002. Gross borrowings have increased from ₹77,750 crore in the February budget to ₹85,818 crore in the budget presented by Mr Siddaramaiah.
