Signs of economic recovery in Karnataka; experts hold their horses

Commercial taxes and excise revenue so far this fiscal have exceeded pre-pandemic figures, in the first clear sign that Karnataka could be on the path to post-Covid economic recovery.

According to data tabled by Chief Minister Basavaraj Bommai in the Assembly, the government has received Rs 60,959 crore from four main revenue sources - commercial taxes (including GST), excise, motor vehicles tax and stamps & registration fees - from April to August.

Commercial tax collection stands at Rs 26,253, higher than Rs 25,042 crore collected in the April-August period in 2019-20, a non-pandemic year.

Similarly, excise revenue is Rs 10,225 crore as against Rs 9,132 crore in the corresponding period two years ago.

The other two revenue streams - motor vehicles tax and stamps & registration fees - are slightly behind the collections achieved in 2019-20.

The government is keeping its fingers crossed on how things will play out in the coming months in terms of the pandemic.

“We are recovering, but it also feels like a rebound,” IT/BT Minister C N Ashwath Narayan told DH.

“People are skeptical of the third wave.” But, Narayan is convinced that Karnataka will be ring-fenced even if there is another wave.

“The vaccination drive is happening well. So regardless of the virus variants, we'll be on a safer pitch.”

After analyzing the data tabled by Bommai, Madhusudhan B V Rao, senior research advisor at the Centre for Budget and Policy Studies, said there were recovery signs.

"But, it's not enough to cheer that growth is fully back on track.”

Commercial tax collection so far is 41% of the total budget estimates.

“Going by trends and picking up of economic activity, including opening up of offices, the numbers for September-end should take it to more than 55%,” Rao said.

Naturally, the revenue receipts in this fiscal so far are better than what they were in 2020-21, a year that was impaired by lengthy lockdowns and curbs on economic activities.

According to Bommai, the state has seen an increase in revenue receipts by Rs 1,524 crore and fiscal deficit is Rs 9,536 crore.

“This also does not mean the growth trajectory is very steep. The real growth adjusted to inflation would be very low,” Rao surmised.

The only restriction currently in place is the daily night curfew starting at 9 pm, hampering shops and commercial establishments that shut earlier than necessary, some argue.

“The night curfew is a preventive measure as there’s still some wariness on what will happen,” Narayan said.

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