Budget to eye more revenue

Thrust to social welfare, agriculture on anvil

Budget to eye more revenue

Chief Minister Siddaramaiah is expected to announce additional resource mobilisation (ARM) measures and give thrust to agriculture and social welfare during the incumbent Congress government’s maiden Budget on Friday.

Siddaramaiah, who also holds the finance portfolio, is not new to Budget preparation. He has already presented seven Budgets, five for the undivided Janata Dal government and two for the Congress-JD(S) coalition government. All along, he has shown a penchant for financial discipline, curbing pilferage and undertaking ARM measures to fund populist schemes.

Siddaramaiah needs additional resources as the subsidy bill is set to cross the Rs 10,000-crore mark this fiscal. The four main populist programmes already announced by the government – 30 kg of rice at Re 1, subsidy for dairy farmers, housing subsidy and loan waiver for the SC/STs and minorities – are expected to cost the State exchequer Rs 6,200 crore.

Ongoing subsidies on power and pension schemes will cost another Rs 6,000 crore.
The Congress election manifesto made a slew of promises, including interest-free loans of up to Rs 2 lakh to farmers and free laptops to pre-university students. The chief minister has promised to implement them in a phased manner.

According to sources in the finance department, the government is looking to raise a revenue of Rs 62,500 crore from the State’s own taxes, i.e, commercial taxes, stamps and registration, excise and transport. This is a 17.35 per cent increase from the State’s tax estimates for 2012-13.

Siddaramaiah is likely to enhance additional excise duty on high-end liquor, increase road tax on four-wheelers and jack up luxury tax rates. Land registration will cost more as the government has already increased guidance value by around 40 per cent in 20 districts.

As stamp duty will have to be paid on guidance value, property registration will cost more from August. The revision of guidance value is likely to fetch the government an additional revenue of Rs 1,000 crore this fiscal. The BJP government, in its last budget presented in February this year, had reduced the stamp duty from six to five per cent. 

The State government’s cash cow, the commercial taxes, fetched the exchequer Rs 32,000 crore last fiscal. The present Value Added Tax slabs are 14.5 and 5.5 per cent. The BJP government last year increased the slabs by 0.5 per cent for generating an additional Rs 1,000 crore to meet expenses of the crop loan waiver scheme, announced to aid farmers reeling under severe drought.

The previous dispensation had announced that it was only a one-time measure and the VAT slabs would be reverted to 14 and five per cent in August 2013. It would be tempting for Siddaramaiah to retain the present slabs, given the additional resources they are generating.

Siddaramaiah has fixed the annual plan size for the State at Rs 47,000 crore for the fiscal 2013-14, after consultations with the Planning Commission.   Social welfare and agriculture will be accorded top priority with several new schemes, including 75 per cent subsidy for irrigation pumpsets, establishment of a statutory State agricultural prices commission, said sources. There would not be a separate agricultural budget, a practice seen during the BJP regime.

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