Bommai’s first budget promises growth on borrowed money | Latest India News
Karnataka Chief Minister (CM) Basavaraj Bommai presented his first budget on Friday promising growth for the pandemic-affected population with borrowed money even as the state’s debt situation rises to alarming levels . “In the current financial year, I propose to limit borrowings to ₹ 63,100 crore instead of budget ₹67,100 crore. For the year 2022-23, we plan to borrow ₹72,000 crore,” Bommai said.
“Total liabilities at the end of 2022-23 are estimated at ₹5.18, 366 crore or 27.49% of GSDP (state gross domestic product),” Bommai said. Total liabilities at the end of 2021-22 amounted to ₹4.57, 899 crores or 26.95% of the state GSDP.
Experts said the short-term approach with the upcoming elections in mind threatens to undo decades of fiscal discipline, which has the potential to keep the southern state overwhelmed with debt for a long time, affecting the creation of long-term assets and jobs as well as increasing pressure on successive governments.
Bommai, like his predecessor, BS Yediyurappa, presented a deficit budget for the second consecutive year even as the size of the budget increased. Budget size increased to ₹2,65,720 crore against a revised estimate of ₹2,57,042 crore in the previous year, registering an increase of 3.37%.
The CM has not increased the tax on any of the state-controlled products as any increase in the financially distressed population would have been against the plans of the Bharatiya Janata Party (BJP) to return to power in the 2023 parliamentary elections. .
“The economy in 2021-22 is on the road to recovery. Under these circumstances, I am not willing to impose (an) additional burden of additional taxes on (the) common man. The tax collection targets will be achieved by making all tax departments work better,” Bommai said in his speech.
The revenue deficit budget is estimated at ₹14,699 crore in 2022-23 vs. ₹15,134 crore in the corresponding year. The budget deficit should be ₹61,564 in 2022-23 i.e. 3.26% against ₹59,240 crores or 3.48% in the corresponding year. The state government has assigned ₹55,657 crores to stimulate economic development.
Despite the severe shortage of funds, the BJP government led by Bommai has forecast 9.5% (advance estimates) for the year 2021-22. “There is growth in resource mobilization as well as general growth in the economy,” Bommai replied when asked about projected growth rates.
Karnataka, like many of its counterparts, is heavily dependent on the revenue it generates from its own taxes under the Goods and Services Tax (GST) regime, which leaves most states at the mercy of the government. of union.
Bommai said much of his hope for growth came from a revival of collecting his own taxes.
The commercial tax department has set itself a target of ₹70,757 crores until the end of February this year against a target of ₹76,473 crores. The government has set itself the goal of ₹ 77,010 crores for 2022-23.
In stamps and registrations, the government has already collected ₹12,105 crore (until the end of February) against the target of ₹12,655 crore in 2021-22. The government has revised this target to ₹15,000 crore. Excise revenue has seen a sharp increase in expectations of ₹24,580 crore (in 2021-22) at ₹29,000 crore (in 2022-23).
The target for the transportation department was cut from ₹7515 crore (in 2021) at ₹8,007 crore (in 2022-23), as per budget.
“They shouldn’t compare growth with the year affected by corona. They should compare it with the year that was not affected by the pandemic,” Siddaramaiah, the opposition leader in Congress, said on Friday. .
While Bommai has reserved ₹55,657 crores to “encourage economic development”, much of the asset creation was done on borrowed money.
According to the medium-term budget plan 2022-2026, “State capital expenditure is mainly financed by borrowing. Capital expenditures were ₹44,237 crore for the 2021-2022 budget forecast (BE) and it has been revised to ₹42,366 crore as per revised estimate 2021-22 (RE). Similarly, revenue expenditure was ₹1,87,405 crore for 2021-22 BE and has been revised to ₹1,95,814 crore as per 2021-22 RE.
Capital expenditure refers to the creation of assets that can create jobs, while revenue expenditure mainly consists of the payment of salaries of government employees and other operating costs incurred by the government.
Economist and National Institute for Advanced Studies (NIAS) professor Narendar Pani said making a comparison to a year of recovery when growth is unsustainable. The amendment to the Fiscal Responsibility Act, which capped borrowing at less than 3% of GSDP, puts enormous pressure on the process of fiscal discipline, Pani said. “Everything that has been done for decades will now be pushed back. That’s even if they stick to the numbers they have,” he said.