Karnataka Govt bids adieu to austerity

With the State economy bouncing back on to the recovery path, the State government has quietly scrapped the strict austerity measures it adopted to cope with the tough days of the global economic slowdown, although no official order has been issued.

Restrictions on holding meetings and conferences in star hotels, new recruitments and foreign tours have been lifted, unofficially, the Finance department too has stopped raising objections to the ostentatious manners of the various departments.

“We are showing a lot of flexibility of late as far as expenditure is concerned due to the spur in economic activities,” sources in Finance department said.

And so is the reason the Government has been liberal in its spendings. For instance, it incurred an estimated expenditure of Rs 30 crore on organising the World Kannada Convention (WKC) in Belgaum and generously hiked DA and HRA for its employees recently. A flick through the supplementary estimates for 2010-11 fiscal, which was over Rs 13,400 crore, reveals that non-Plan expenditure in the current year has gone up steeply.

The Government first issued the economy order in November 2008, when it started feeling the pinch of the economic downturn. Exactly a year later when unprecedented floods hit north Karnataka, it issued another order directing all departments to strictly adhere to the economy measures.

Chief Minister B S Yeddyurappa had gone a step ahead and announced 10 per cent cut in non-plan expenditure in order to save for the development programmes.

The Government had said a strict no to foreign tours and holding meetings in star hotels, frozen all new recruitments and creation of new posts, cut down expenses on stores, stocks, furniture, fixtures, water, power and telephone charges, use of fuel and purchase of vehicles.

The State Medium Term Fiscal Plan 2011-15 tabled in the on-going budget session of the State Legislature also does not speak anything about continuing the economy measures -- a clear indication to the Government’s intention to abandon all austerities.

Normally, the Government spells out in detail its fiscal plan, including economy measures, if any, it intends to follow.

High growth

The State economy has been projected to grow at 8.2 per cent in the current, against 5.2 per cent last year.

For the first time in three years, the Government has been able to surpass its budgetary tax revenue target in 2010-11 fiscal: It is expecting to mobilise Rs 38,048.67 crore by this financial year end, against the budget estimate of Rs 36,228.32 crore –– a Rs 1,820 crore jump. Altogether, the Government is expecting excess revenue of Rs 4,146 crore in this fiscal, including non-tax and share from the Central taxes and grants from the Centre.

The tax revenue collection had been hit in the last three years due to global economic slowdown.

Shortfall in budgetary revenue target had thrown the State finances out of gear and forced the Government to cut even the plan expenditure. For instance in 2009-10 fiscal, the Government was able to collect Rs 29,338 crore against the target of Rs 32,721 crore –– a shortfall of Rs 3,383 crore.

* Govt has unofficially bade adieu to economy orders
* No restrictions on ostentatious spending
* Heavy non-Plan expenditure in 2010-11
* Medium Term Fiscal Plan 2011-15 silent on continuing austerity measures

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