The fiscal deficit is well contained at 2.84 per cent (Rs 6,296 crore) as specified by the State Fiscal Responsibility Act. The buoyancy of revenue growth has been matched by healthy increase in expenditure (Rs 43,216 crore) and capital outlay (Rs 10,168 crore). Unfortunately, for the people of Karnataka the benefits fail to reach large sections of society due to leakage in many Irrigation and Social Welfare programs.

Growth, equity
“Growth with equity” is the mantra of most politicians today and has been mentioned in the last three budget speeches. Unless reforms are implemented in agriculture and a concerted effort is made to increase wages in unorganised sector, higher incomes will be a distant dream for many people.

While world prices of many agricultural products have risen 30 per cent in the past year, farmers in Karnataka have seen their incomes reduced either due to natural calamities or bad policies of government. Research reports indicate that water stress, doubling of cultivation costs, domination of cash crops is having a devastating effect on farming all across the state. The budget disappoints with no new proposals to tackle the farm issue in the state.

Own state collections are projected at Rs 31,446 crores, an increase of 17 per cent over the previous year. People of the state are one of the highest taxed in the country, hence the decision not to increase taxes is a welcome proposal.

Abolition of entry tax on petrol and diesel would have put more money in the pockets of middle class and kept many of the essential commodity prices in check. 

The increase in education, health and social welfare schemes are a step in the right direction although overall expenditure on health continues to disappoint.

The Rs 101 crore provided for Primary Health Clinics is insufficient, since the state needs another 1,000 clinics to dispense proper health care to all its citizens. The state could have also provided resources to extend the highly successful Karnataka Yashasvini scheme to include senior citizens and poorer sections of society. Infrastructure development lacks funding for many of projects conceived by state authorities. This will lead to many off budget borrowings by the state including funds for Bangalore Metro Rail Project.

Finally, as part of good governance setting fiscal parameters alone is unsatisfactory. The state needs to improve the budget documentation by providing departmental description and statistics.
Audited financial statements should be released within six months of completion of fiscal year. A report on accrual based accounting is the need of the hour that should include all off budget borrowing so as to inform current citizens of all future liabilities.

N V Krishnakumar,
Financial analyst,
 Lok Paritran