Karnataka govt may monetise land to raise resources to support expenditures resulting from 'guarantees'

Bengaluru: After hiking fuel taxes, the Siddaramaiah administration is actively considering a plan to monetise at least 25,000 acres of land near Bengaluru to raise resources and sustain spending that has bulged due to the five ‘guarantee’ schemes. 

Monetisation of land, or “state-guided urbanisation”, is among the measures suggested by consultancy major Boston Consulting Group (BCG), which has been onboarded by the Siddaramaiah-led finance department to “unlock” budget potential. BCG is already the government’s knowledge partner on attracting investments.

Mobilising additional resources is inevitable for the Siddaramaiah-led Congress government, which has set aside a whopping Rs 52,009 crore for the ‘guarantee’ schemes this fiscal. Last year, the government spent over Rs 36,000 crore on the schemes, pushing the state into a revenue deficit.

According to details accessed by DH, the government has preliminarily identified for monetisation 15,000 acres in Nandagudi (Hoskote) and 9,800 acres in Bidadi where townships are proposed. Also, 300-400 acres distributed across 73 land parcels are pitched for monetisation. These lands come under the Bangalore Metropolitan Region Development Authority (BMRDA). 

Idle or vacant lands of the Bangalore Development Authority (BDA) are also being considered for monetisation.

“We are focusing on public-private partnership and state-guided urbanisation, which includes monetisation of assets,” Additional Chief Secretary (Finance) LK Atheeq said. “The idea is to find untapped sources of revenue while also rationalising expenditure for fiscal sustenance,” he said, adding that the government wants to raise an additional Rs 5,000 crore per fiscal.

In the days to come, the government will pick the best monetisation model to raise additional resources. “In the BDA, for example, there are lots of vacant properties that aren’t used at all. With a rational framework that’s also transparent, infrastructure development can be taken up for B’luru with the funds that are mobilised,” Atheeq said.

In its preliminary report, the BCG said it is “essential” for Karnataka to increase its receipts. Karnataka’s total receipts as a % of GSDP is 9 against Maharashtra’s 12%, Telangana’s 13% and Tamil Nadu’s 10%. Maharashtra and Telangana manage a larger budget than Karnataka as a % of GSDP, but with a “robust” receipt inflow, it pointed out. 

To rationalise or trim expenditure, the government has prioritised energy, rural development, irrigation, urban development and public works departments.

In the energy department, for example, the subsidy for irrigation pumps and the Gruha Jyothi guarantee form 97% of the allocated budget, providing an opportunity for rationalisation.