As can only be expected in the absence of an elected government, the vote on account budget for 2008-09 for Karnataka, presented to parliament on Monday, does not contain any new schemes or projects and has merely made sectoral allocations based on revenue projections. To that extent, the fears expressed in some quarters that the exercise will be used to further the electoral prospects of the Congress party in the coming Assembly elections have been belied and there cannot be any complaints on that score. But the document does show that the misgovernance over the last two years has really started impacting on the economy of the State and the incoming government will have a major challenge on its hand upon its installation.

Though the financial year 2007-08 is expected to close with a balance of Rs 58.32 crore as against the budget estimate of Rs 73.31 crore, finance minister P Chidambaram, who presented the budget, has noted that there has been a major shortfall in the collections made under commercial taxes and stamps and registration fee. The realisation under stamps and registration is expected to be lower by Rs 588 crore and that under commercial taxes by about Rs 500 crore. These sizeable losses, attributable to a ham-handed approach of the then coalition government, have fortunately been made up with buoyancy in excise and motor vehicle tax collections. The excise revenue has gone up by Rs 1,370 crore despite the ban imposed on the manufacture and sale of arrack as the habitual drinkers have merely switched over to the more expensive Indian Made Liquor. With the MV tax exceeding the budget estimate by Rs 245 crore, the aggregate tax revenue has gone up by Rs 527 crore.

It is gratifying to note that the state’s budget for 2008-09 will have a revenue surplus of Rs 2,972.65, thus keeping in tune with the Karnataka Fiscal Responsibility Act 2002. The allocations for priority sectors like agriculture (Rs 1,564 crore), irrigation (Rs 4,542 crore), education (Rs 8,592 crore) and health (Rs2,122 crore) have been substantially increased. In order to redress the regional imbalances, the allocation for backward areas as per the Nanjundappa committee’s report has witnessed a 58 per cent increase from Rs 1,571 crore to Rs 2,489 crore. As the vote on account is intended to authorise expenditure beyond April 1, 2008, these allocations will have to be taken as “provisional” and the incoming government will have the power to alter them. What Chidambaram has presented is essentially an “accountant’s budget” and the real one will have to await the new government.