Karnataka CM Siddaramaiah calls for hard work amid revenue shortfall fears

The impact of drought and global market fluctuations on taxation has raised fears of a revenue shortfall in Karnataka with Chief Minister Siddaramaiah asking authorities to work harder to meet the targets for the current fiscal, on Friday. 

A revenue shortfall will be bad news for Siddaramaiah, the finance minister who has to fund the five guarantees that helped Congress storm to power in the state. 

On Friday, Siddaramaiah took stock of the state’s tax revenues. In the 2023-24 fiscal, the government wants to earn Rs 1.82 lakh crore which includes Commercial Taxes (Rs 98,650 crore),  Excise (Rs 36,000 crore), Stamps and Registration (Rs 25,000 crore), Transport (Rs 11,500 crore) and Mines and Geology (Rs 9,000 crore). 

At the meeting, Siddaramaiah was told that about Rs 1.10 lakh crore has been collected so far. The government did not reveal the exact numbers. Only the Transport Department is “on track” to meet its revenue collection target, it is said.

“The revenue growth projection is quite optimistic. But we are slightly falling short,” a Finance Department official said. 

Drought in 223 out of 236 taluks has hit revenue collections, the official said. 

“Then, it was late by the time the government started functioning from August after the new budget was passed. There was a freeze order on works and payments, which had an impact on revenues,” the official explained. 

Karnataka is facing GST losses due to a fall in petroleum and steel prices in the international market. “Steel, for example, has fallen from Rs 91,000 per tonne to Rs 61,000 per tonne, which has led to GST losses,” the official said. 

The Mangalore Refinery and Petrochemicals Limited (MRPL) is one of Karnataka’s top taxpayers. “Due to crude oil prices falling, we have seen a major tax reduction,” the official said.

It could be that the government has fixed unrealistic revenue targets. “But compared with last year, the government has collected Rs 12,000 crore more,” the official said. 

This fiscal, Siddaramaiah has set aside Rs 39,815 crore for the guarantees. Next year, they will cost Rs 52,000 crore.