As Karnataka Chief Minister Siddaramaiah prepares to present his 14th budget on July 7, the main focus of the government will be on finding adequate resources for funding the five flagship schemes of the Congress while not compromising on existing welfare schemes. The cost of implementing the five schemes – Anna Bhagya, Gruha Jyothi, Gruha Lakshmi, Gruha Shakti, and Yuva Nidhi – is estimated at around Rs 55,000 to Rs 60,000 crore annually. While three of the schemes have begun, two of them – Gruha Lakshmi and Yuva Nidhi – are yet to be implemented. The estimated cost of these schemes for the remaining eight months of the year they have to budget is around Rs 35,000 to Rs 40,000 crore.
Sources taking part in the discussions on revenue mobilisation say that the government will be consolidating the expenditure by dropping non-essential schemes or schemes that overlap with the five schemes promised in the Congress manifesto. Some of the schemes that are likely to be dropped will be the ones introduced by the previous Bharatiya Janata Party (BJP)-led government. But no welfare measure is likely to be dropped.
“There will be a consolidation of schemes, especially when they overlap with other schemes. In some cases, they will be brought under an umbrella scheme. This is likely to happen for several schemes like free electricity or education schemes offering scholarships and such. But there will be an effort to ensure that no significant sector gets cuts,” the source said.
Schemes announced by the previous government like scholarship schemes or the long-running electricity scheme such as Bhagya Jyothi and Kuteera Jyothi will all be subsumed under the Gruha Jyothi scheme. At this point, the government is not likely to move ahead of other promises made in the party manifesto that would lead to increased expenditure.
With the government settling in and focussing on the implementation of the five schemes, Siddaramaiah has held very few consultations on budget expectations. The CM, known usually for his extensive consultations with various groups ahead of the budget, has not had such exercises this year for lack of time, but is said to have been unequivocal in two things: focussing on education and health schemes for Scheduled Caste (SC), Scheduled Tribe (ST), Other Backward Castes (OBC), and minorities, bluntly expressing his inability to accommodate wishes of certain groups when they approached him.
As a part of retaining welfare measures in the field of education, the government is likely to announce the start of scholarships for SC/ST/OBC and minorities. Schemes offering education loans and direct payment to colleges for those who qualify in the Common Entrance Test (CET) for professional courses are likely to be resumed. These schemes had been discontinued after COVID-19. The government is also likely to continue schemes like providing eggs/bananas/chikkis for school children once a week, if not increase it to twice a week.
Citizens are most likely to see an increase in guidance values of properties, which have not been revised for the last four years. No relief is expected to be given for property tax rates, whether residential or commercial. Industry bodies in Karnataka had asked the government for a reduction in property tax as rentals have been steadily increasing in commercial and housing properties, raising the cost of living and doing business.
Predictably, excise taxes are likely to be increased as the government feels there is scope for marginal increase. The government is also likely to set an increased target this year for revenue from mining. Previously, the sector had a revenue of Rs 6,900 crore and the idea is to increase it eventually to Rs 10,000 crore over the next few years.
The government is also unlikely to make any recommendation towards decreasing energy tariffs for the industry, which has been seeking a decrease from 9% to 3%, as the state electricity supply companies are not in good shape. However, the government might offer some relief in the form of a marginal reduction in the tariff or other incentives, as officials stated that they want to ensure that capital investment is not affected in any way.
With a robust Goods and Services Tax (GST) collection that is increasing, the government is looking at stricter enforcement, plugging leakages, and bringing tax evaders under the GST net.
The latest Gross State Domestic Product (GSDP) for Karnataka is pegged at Rs 25.5 lakh crore, a marked increase from the Rs 23 lakh crore estimated earlier. This increase has given the state space for additional borrowing. However, even keeping a scenario of increased expenditure from the five schemes, the government will not borrow to its full capacity.
Sources also said that the outstanding liabilities of the previous government will make it a tough year ahead for the government. Eventually, as some studies in some states have indicated, the transfer of money to people through various welfare schemes is expected to bring it back to the government through increased spending.