'Big budget, bigger debts': Yediyurappa's show of Karnataka's finances
- The state is also expected to borrow ₹71,332 crore this year.
Karnataka chief minister BS Yediyurappa on Monday presented a revenue deficit budget with higher borrowings in what appears to be an attempt to mitigate the deepening distress, depleting resources and rising debt to try and manage expectations of the calamity-prone and pandemic-impacted state.
Yediyurappa, who seized power in 2019 by engineering the collapse of the HD Kumaraswamy-led Janata Dal (Secular) or the JD(S)-Congress government with borrowed support, is now also forced to run the remainder of his two-years on higher borrowings.
At 2,46,207 crore, the state registered a 7 per cent growth as against ₹2,29,925 crore (revised estimates) presented by the Yediyurappa-led Bharatiya Janata Party (BJP) government in 2020.
Also read: Congress terms Karnataka budget as 'hollow'
However, Karnataka's Gross State Domestic Product (GSDP) contracted by 2.6 per cent, according to government data.
“I have presented a development-oriented budget today without increasing any of the increasing tax rates,” Yediyurappa told reporters at a post-budget press conference on Monday in Bengaluru. Yediyurappa has presented eight budgets so far and termed this one that was one of the most challenging given the circumstances.
While the government continued to cite the lack of revenue inflows due to Covid-19, borrowings have more than made up for the shortcomings even though the burden of loans continue to pile up in Karnataka.
The fiscal deficit is expected to be ₹59,240 crores in 2021-22 or 3.48 per cent of the GSDP as against ₹46,072 crores in the corresponding year or 2.55 per cent.
The revenue deficit was estimated to be ₹15,134 crore in 2021-22 as against a surplus of ₹143 crores in the corresponding year.
The total liabilities saw a sharp increase from ₹3,68,692 crore or 20.42 per cent at the end of 2020-21 to ₹4,57,899 crore or 26.9 per cent, registering a 24.19 per cent increase in liabilities. The liabilities stood at 26.9 per cent that is well above the cap to maintain fiscal discipline.
“Suitable amendment will be brought to the Karnataka Fiscal Responsibility Act 2002 in this regard,” Yediyurappa said in his budget speech.
The state is also expected to borrow ₹71,332 crore this year.
Under immense pressure to show some semblance of performance for his two-year-old government that has made more news for internal dissent, bickering and the recent sex-scandal, Yediyurappa presented a budget that is high on allocations but may fall short on delivery since a significant chunk of the funds are expected to come from a cash-starved Union government.
Expenditure for the previous budget stood at around 94 per cent.
Yediyurappa clarified that there would be no slashing of funds for any of the programmes announced last year.
The budget has been broadly classified into six categories: Agriculture and allied activities, welfare and inclusive growth, stimulating economic growth, comprehensive development of Bengaluru, conservation of culture, heritage and natural resources, administrative reforms and public service delivery.
Karnataka’s principal opposition party, the Congress, staged a walkout with black armbands in protest of the presentation of the budget.
“This budget lacks transparency,” Siddaramaiah, the Congress’s leader of the opposition said in Bengaluru. He said that Yediyurappa had clubbed 34 departments into six broad sectors and has not provided details of allocations.
“This budget is anti-people, anti-development, presented to bankrupt the state and without any vision,” Siddaramaiah, who has presented record 13 budgets in Karnataka said.
Yeddyurappa has allocated ₹52,529 crore for stimulating economic growth which lists out projects in water, construction of roads and airports, ₹3,000 crore to rectify the regional imbalance, setting up clusters like bulk drugs, research and textile as well as tweaking policies to attract investments among others.
“The budget seems to be full of promises but that which is not backed by the capacity to fulfil those promises. The government does not seem willing to bite the bullet as there are no visible measures to bring in some regulation or austerity measures within the government to control expenditure,” said Sandeep Shastri, a Bengaluru-based political analyst and national coordinator for Lokniti, a political research organisation.
Shastri added that the revenue deficit is likely to create an alarming effect which is likely to spill over to the next budget as well.
At a time of distress, Yediyurappa has proposed to build a guest house in Ayodhya for ₹10 crore.