Expert – The New Indian Express

By Express press service

After the harsh shock of the pandemic, India’s economy suffered significantly in terms of growth, employment and loss of life, and Karnataka was no exception. Even then, the state could resuscitate and resume a stable growth trajectory, with the GSDP registering 9.5% growth, brought by agriculture (2.2%), industry (7.4%) and services (9.2%).

Usually the Economic Survey precedes the budget, but this time it happened simultaneously. There is an uneasy feeling that there may be missing efforts on the revenue side, with budgeted revenue valued at Rs 189.9,000 crore. This is slightly higher (0.16%) than the revised estimate for 2021-2022. Meanwhile, the planned expenditure is Rs 204.58 crore, 4.48% higher than last year. Revenue from state taxes is estimated at Rs 131.88 crore, nearly Rs 5,000 crore lower than the 2021-22 estimate.

What was the reason behind this? Have the new tax avenues dried up? Tobacco products and stamp duties could have been exploited, in addition to some divestment. In the pre-budget discussions, eyebrows were raised over the debt and borrowing piled up. This year, borrowing accounted for 27% of total revenue, compared to 29% in the 2021-22 estimate. This was possible thanks to the increase in the share of subsidies and taxes from the central government.

In its budget speech, the CM emphasized the triple “E”: education, employment and empowerment. Inclusive development seems to be the common thread of the budget arguments. The education allowance is set at Rs 31,980 crore, higher than the previous budget. The CM has also incorporated an allocation for the Mekedatu project by popular request. The new textile park and good infrastructure development funds for Bengaluru for footbridges, rail corridor and new housing projects will help create jobs.

On the capital account side, the situation could only be balanced due to the open market borrowing of Rs 67.91,000 crore. This is in addition to the Centre’s grant and borrowings from institutional sources. With all these adjustments, the CM could fix the revenue shortfall at Rs 14.69,000 crore, higher than last year’s revised budget estimate.

On the other hand, sources of income such as cigarettes and tobacco products have not been properly exploited. Second, the benefits are not targeted, so many programs may not show immediate results. Third, the significant problem of labor migration from rural to urban areas, which puts pressure on the economy, is not taken into account. This could have been done by emphasizing rural industrialization. Finally, it is high time for North Karnataka to receive increased investment in terms of industries. These can act as catalysts for development.

Prof RS Deshpande
Visiting Professor, ISEC, Nanjundappa Chair Professor CMDR, ICSSR National Fellow

Sallie R. Loera