Siddaramaiah's sops set to leave a huge hole in govt's finances

Siddaramaiah's sops set to leave a huge hole in govt's finances

State's subsidy bill is expected to increase by a whopping 30%

Siddaramaiah's sops set to leave a huge hole in govt's finances
Chief Minister Siddaramaiah’s move to shower freebies and expand subsidy schemes to woo the poor, considered the Congress’ vote bank, is set to burn a huge hole in the state government’s pocket.

Consider this: the total subsidy bill is estimated to increase by 30% in the coming financial year compared to the current year. And subsidy expenditure estimated in the state budget 2017-18 presented recently – Rs 24,231.83 crore – is expected to be insufficient for implementing a host of these schemes, including the Bhagya schemes. Interestingly, the subsidy expenditure had declined by about 3% in the current year compared to the previous year.

This being his last full-fledged budget before the crucial 2018 Assembly polls, Siddaramaiah has generously increased the allocation to almost all the subsidy schemes. Whether it is Bhagya Jyoti (free power supply) or Anna Bhaya (free food grain) or Kshera Bhagya (free milk supply) or Krishi Bhagya (funding for farm ponds), he has either increased the quantum of benefit or sought to cover more beneficiaries.

Power subsidy
Under power subsidy, which is the biggest among subsidy schemes, free supply of power to 26 lakh Bhagya Jyoti beneficiaries has been increased to 40 units from 18 units. This is over and above the free power supply being provided to 25 lakh farmers having up to 10 HP-capacity irrigation pump sets. Rs 8,841 crore has been allocated for power subsidy in 2017-18, which is Rs 1,642 crore more compared to the current year.

But expenditure on power subsidy has been estimated without anticipating the likely hike in power tariff in the coming days. Karnataka Electricity Regulatory Commission is currently holding hearings on Rs 1.48 tariff hike per unit sought by all electricity supply companies. The Commission is likely deliver its order next month. “We are likely to fall short of funds to meet the subsidy expenditure. Additional funds will be sought in the supplementary estimates in the coming days,” director (Finance), Energy Department, M D Ravi said.

Similarly, the Housing Department has actually estimated the subsidy expenditure at Rs 4,245 crore in the coming year, but in the budget it is estimated at Rs 3,477 crore. The chief minister has announced construction of seven lakh houses for the poor against three lakh for the current year. Besides, houses will be sanctioned to all eligible SC/STs who apply under the Dr B R Ambedkar Nivas scheme. The government spends an estimated

Rs 1.20 lakh to Rs 1.50 lakh for constructing each of these houses, official sources in the Housing Department said.Under Anna Bhagya, quantum of food grains per person per month has been increased to 7 kg from 5 kg. The food subsidy has, as a result, gone up by Rs 1,501 crore. Food subsidy also includes new Anila Bhagya (free LPG connection). Government school children will be provided free milk five days a week instead of three. It is estimated to cost an additional Rs 367 crore. For Krishi Bhagya, which has been extended across the state, the subsidy allocation has been increased by Rs 560 crore.