After a significant lull and political instability, Karnataka is slowly emerging back on the track of growth with poise. It is quite a commendable task that this year’s financial statement is prepared and completed without any political interference at the state level. Article 356 of the Constitution empowers the placement of the budget statement for the state in parliament. Accordingly, it was expected that the Finance Minister may provide some finishing political touches.
The expectations were ripe about politicisation of the Karnataka budget in view of the impending assembly elections and possible gains. However, rationality prevailed and the budget prepared by the Karnataka bureaucracy was retained with its growth-oriented strategy. As any one could see almost every sector of concern to the state is attended here. Technically it is one of the specific budgets.
During last year, the state’s economy emerged out of decades of the worst agrarian crisis and the farm sector is presently in a take-off stage. Therefore, it certainly needed additional investment in order to stabilise the gains achieved during the last two years. The allocation of Rs 1564.51 crore for agriculture and horticulture will fire the growth engine. The stress on infrastructure has been quite significant both in urban as well as in rural areas.
Therefore, emphasis was expected in developing rural roads, irrigation, rural heath sector and small industries. This is one of the important exercises in these annual developmental allocations which is totally different compared to the budget presented in collaboration with public representatives. One may have to recall that during the early decades of independence, budget allocations had little political flavour. It all began in the 1970s and intensified over the years.
This year’s Karnataka budget shows a clear apolitical picture of developmental allocations, with a clear focus on maintenance and strengthening of growth drivers rather than announcing myriad new schemes. Many such schemes launched in the earlier budgets have been starving for funds and the current budget has taken a step in the right direction by addressing the issue of providing funding support to the ongoing works.
The current budget has carried forward the recent achievements of the state in fiscal consolidation efforts and the same is reflected in the adherence to the provisions of the Fiscal Responsibility and Budget Management Act of 2002. The current budget shows an estimated revenue surplus of Rs 2972 crore which is likely to increase marginally. It has also maintained fiscal deficit of less than 3 per cent and revenue surplus of 1.22 per cent.
The allocation of Rs 1564.51 crore for agriculture and horticulture is certainly a good step and that will spur growth in the sector. Rs 220 crore towards special initiatives to improve economic conditions of the farmers and Rs 184 crore for Rashtreeya Krishi Vikas Yojana will bring back the agricultural sector on the main stream growth track. The allocation of Rs 4542 crore towards major, medium and minor irrigation and Rs 500 crore towards AIBP (Accelerated Irrigation Benefit Programme), will help the irrigation sector.
An important aspect to be noted is that emphasis here is on completion of ongoing projects with an objective of bringing in more acreage under assured irrigation. Unlike the full loan waiver scheme of last year and the current Central government’s loan waiver, the state’s budget has allocated Rs 112 crore towards subsidising the interest rates and that is certainly a better way to help the farmers to reduce their loan burden.
In the human resources development sector, an outlay of Rs 8592 crore on education and Rs 2122 crore on health is in the right direction. The condition of the state roads, especially that of district roads has been appalling on account of inadequate funds provided for maintenance in the past. The current budget has provided Rs 300 crore for the maintenance of major district roads.
The substantial increase in the outlay proposed for the provision of basic amenities under Panch Soulabhya which includes water supply, toilet facilities etc to primary and the secondary schools and the emphasis laid on providing adequate staff and making new educational institutions started in the earlier years fully functional reflects the long felt need to make the existing schemes/programmes deliver the expected results by providing proper funding support. This is unlike many previous budget speeches which were filled with new scheme pronouncements.
While the state’s performance on the revenue front has been comfortable the non-tax revenue generation has been an issue bothering the state for quite a few years. Probably, the state needs to tighten on the revenue side but as on the development side this seem to be a good exercise.
In the overall analysis, this budget is one of the neat textbook exercises in dealing with the major problems confronting the Karnataka economy, without any frills associated with it.
Probably, we may expect the economy to step up growth by about 2.6 per cent per annum than the preceding year and it may be slightly lower than the projected 9 per cent growth of Gross State Domestic Product (GSDP).
