Karnataka Budget: Taxes, borrowings up, allocation cut to fund guarantee schemes

Increase in taxes, prioritisation of government programmes, and additional borrowings will together fund the five pre-poll guarantees of the Congress government, even as allocation to some crucial departments and subsidies have come down in the full-fledged “guarantee Budget” presented by Chief Minister Siddaramaiah on Friday.

Increase in taxes, prioritisation of government programmes, and additional borrowings will together fund the five pre-poll guarantees of the Congress government, even as allocation to some crucial departments and subsidies have come down in the full-fledged “guarantee Budget” presented by Chief Minister Siddaramaiah on Friday.

The five guarantees are expected to cross ₹52,000 crore annually when implemented in the full year. Mr. Siddaramaiah estimated that ₹35,410 crore is required to fulfil the guarantees in the rest of this year.

When asked about the programmes and schemes that may have taken a hit, he told reporters in the post-Budget presentation press conference, “Some programmes have come down and some have gone up.” He said, “We have not been able to present a revenue-surplus Budget due to the implementation of the guarantees. However, in the other two parameters of fiscal deficit and debt ratio to GSDP, we are within the limits prescribed in the Fiscal Responsibility Act,” he added. The revenue deficit has been pegged at ₹12,523 crore.

While allocations to departments such as Energy, Women and Child Development, and Food and Civil Supplies, that are implementing the guarantees, have gone up, the allocations to crucial departments such as Education, Health and Family Welfare, Agriculture, Water Resources, Urban Development, and Rural Development and Panchayat Raj have come down in comparison to the Budget allocation in 2022-2023.

This year, the government has estimated the cost of implementing Gruha Lakshmi to be around ₹17,500 crore to benefit women heads of 1.3 crore families in the State with a monthly assistance of ₹2,000. An allocation of ₹2,800 crore has been made in the Budget for the Shakti scheme this year which will benefit about 49.6 lakh women with free travel in public transport buses. The Gruha Jyothi scheme of 200 free units of power to households will cost ₹9,000 crore this year, and the Anna Bhagya scheme of providing 5 kg additional free rice will cost about ₹10,275 crore. Yuva Nidhi, the financial assistance scheme for unemployed graduates and diploma holders, will need about ₹250 crore, taking the total to be around ₹39,825 crore, data from the government shows.

Mr. Siddaramaiah said the guarantees would provide ₹4,000 to ₹5,000 monthly to a beneficiary family and between ₹48,000 and ₹60,000 annually.

To fund the guarantees, the State government has proposed to increase taxes and it is expected to bring about ₹13,500 crore while prioritisation of programmes, including a reduced allocation to some, will provide the government an additional ₹7,000 crore. While Mr. Siddaramaiah said ₹8,000 crore additional borrowings would be made to fund the guarantees, the actual borrowings would increase by over ₹13,000 crore from ₹72,000 crore in 2022-2023 to ₹85,818 crore this financial year. When the former Chief Minister Basavaraj Bommai presented his Budget in February, he had estimated the borrowings to be around ₹78,000 crore.