Karnataka cut nearly Rs 20K crore funds due to Covid-19

Government cut Rs 19,774 crore from 40 departments to manage costs during the Covid-19 pandemic

Karnataka's urban development, irrigation, public works, and rural developments are the biggest losers as the B S Yediyurappa administration resorted to cut funding in the pandemic-hit 2020-21 fiscal, official data shows.

In all, the government has cut Rs 19,774 crore from 40 departments to manage costs during the Covid-19 pandemic, according to information Yediyurappa tabled in the ongoing session of the Legislative Assembly.

The biggest cut - Rs 4,816.23 crore - was effected in the Budget of Urban Development Department, followed by Major Irrigation (Rs 3,713.44 crore), Public Works (Rs 2,317.93 crore) and Rural Development & Panchayat Raj (Rs 1,486.48 crore).

The Covid-19 lockdown brought life to a halt and hit the government's finances hard, forcing Yediyurappa, who holds the finance portfolio, to cut funds as revenues plummeted.

"The state and central government's tax collections are less than the budgetary estimates due to complete stoppage of economic activities on account of lockdown," Yediyurappa said in his 2021-22 Budget speech, adding that "it has become difficult for the state's revenue resources to reach the targets of 2020-21".

According to the data, the government estimated to generate Rs 1.79 lakh crore through tax revenues, own non-tax revenues, devolution of tax from the Centre and grants-in-aid in 2020-21 fiscal. From April 2020 to January 2021, the government’s receipts were Rs 1.19 lakh crore - about 66%.

"...despite recovery, reaching pre-lockdown levels will take time," the state’s Medium Term Fiscal Plan 2021-25 pointed out.

"Due to reduced receipts in the year 2020-21 and also due to increased committed expenditure in the future years, it will be difficult to adhere to Fiscal Responsibility and Budget Management (FRBM) parameters unless long term reforms are taken up," the MTFP said. "Hence, it is imperative that schemes are rationalised; restructured and merge certain departments and also abolish certain unnecessary posts across various departments."

The state’s fiscal management review committee has recommended reviewing schemes whose size is less than Rs 20 crore and "remove them from the next financial year".