Chief Minister HD Kumaraswamy presented Karnataka’s 2nd budget for 2018-19 today. This budget came after former CM Siddaramaiah had presented a budget in February. However, Siddaramaiah who had claimed that he will be presenting the budget for another 5 years during campaigning lost badly in the elections and was forced to play second fiddle to the JDS and form a unholy coalition government in the state.
Many in the ruling coalition, including Siddaramaiah, were not keen to go for a second budget. The opposition leaders from the BJP too had said that there was no need for another budget. But for Kumaraswamy, the budget was an exercise in image building for his government which had no popular mandate. The functioning of the government, which has been in power for 43 days, seemed to be without an agenda. The common minimum programme chalked out between the Cong and JDS has hit many roadblocks with ministers either complaining about the responsibilities given to them or about the working of their coalition partner.
With no much headway being made in terms of governance and administration, HD Kumaraswamy’s ploy to present another budget and use it as a platform to declare more sops to his vote bank has been proved correct today. Many of the budgetary announcements validate this.
Budget for 4 districts or the entire state!
The JDS won most of its seats from constituencies in the old Mysore region (Mysore, Mandya and Hassan) and Bengaluru. Most of the projects have been allocated for these regions only. For example:
- CM announced 6 elevated corridors for Bengaluru
- Medical college for Kanakapura, Super specialty hospital in Ramanagara and Govt Hospital in Mandya to be upgraded.
- New cocoon market in Mysuru. No similar projects for cotton or corn farmers in North Karnataka.
- Rs 50 crore has been earmarked for rejuvenation of the infamous Bellandur lake. Same was announced in February budget too by Siddaramaiah.
-Many other projects announced were mostly for the benefit of the 4 districts. Mangaluru and Coastal Karnataka remained ignored in the budget without any major announcement.
Farm Loan Waiver - Passing the buck
The much hyped farm loan waiver has been announced in the budget. Kumaraswamy has tried to pacify the farmers who were who promised with complete loan waiver. The farm loan waiver announcement has angered those farmers who pay their loan installments promptly and on time. Farm loans upto Rs. 2 lakhs will be waived off. This will cost Rs. 34,000 crore to the state’s exchequer. Farmers will now be able to borrow new loans and Rs. 6500 crores have been earmarked to waive the arrears.
Kumaraswamy has hiked taxes on petrol, diesel to pay for the farmers debts. The increase in cess on petrol has been increased to 32% from the existing 30%. Cess on Diesel has been increased to 21% from 19%. This means that the price of petrol will be increased by Rs 1.14 per litre and that of diesel by Rs 1.12 per litre. The common tax paying citizens of the state will be further burdened to pay for the sops of the government.
The tariff on power too has been increased in the budget. A steep increase of 20 paise per unit has been declared. Excise duty on liquor in all 18 price slabs has been raised. The increase in rates will now be 4 per cent on current rates.
On the one hand, taxes have been raised, and on the other hand, many departments have also seen a cut in their grants. Hike in fuel taxes is sure to impact prices of many commodities. Cut in grants could impact the working of those departments.
Budget in a Nutshell
The state's total tax collections for 2018-19 has been estimated to be at Rs 1,06,621 crore which is an increase of 16.25% over the 2017-2018 estimates. This includes the relief received from GST losses.
Income from other sources is estimated at Rs 8,181 crores. The state government is expecting Rs 36,215 crore from its share in the central taxes and a further Rs 15,379 crores as subsidy from the Central Government. The total amount of loans has gone up to Rs 47,134 crore with non-debt receipts of Rs 75 crores. An amount of Rs 129 crore is estimated to be the recovered amounts from loans.
Rs. 16,760 crore is expected to be raised by the various state-owned boards, corporations and local bodies on their own.
Where does the rupee come from?
State Tax - 49 paise
Loans - 21 paise
Central Tax - 17 paise
Central Government Grants - 7 paise
State taxpayers - 4 paise
Public Accounts - 2 paise
Where does the rupee go?
Agriculture Irrigation and Rural Development - 19 paisa
Other Financial Services - 14 paisa
Debt Consolidation - 13 paise
Social Welfare -12 paisa
Other Social Services- 5 paisa
Health - 4 paisa
Water purification and hygiene-3 paisa
Other General Services - 17 Paise
CM HD Kumaraswamy has also announced that most of the schemes and announcements made by Siddaramaiah in the February budget would continue. Given this, many financial experts have questioned the rationale behind another budget instead on focusing on prudent expenditure for announcements already made and wait till next formal budget for better and visionary financial planning. This hurried exercise only affirms the doubts expressed from various quarters about the longevity of this coalition government. Is Kumaraswamy genuinely interested in adhering to the budget or would rest on the laurels of these announcements needs to be seen.