Urban land monetisation among steps to shore up revenues; Panel submits report to Karnataka CM

Bengaluru: Monetising urban land assets, broadening of the tax base and auction-based digital excise licensing are some of the recommendations that the Resource Mobilisation Committee (RMC) has made in its report submitted to Karnataka Chief Minister Siddaramaiah on Thursday.

The committee, headed by retired IAS officer KP Krishnan to look at how the state can mobilise additional resources to meet growing expenditure needs, was formed in August 2024.

According to a statement from the chief minister's office, the RMC has recommended unlocking revenue potential through "scientific asset valuation, expanding leasing under public-private partnerships and monetizing urban land assets".

At present, the government faces the challenge of asset data management and systematic surveying of state-owned properties, the RMC said in its report. There is "low non-tax revenue, especially from user charges and government assets, with substantial opportunities in leasing and monetization untapped," the report stated.

The RMC also pointed out "over-reliance on a few major sources of revenue".

Currently, the state's own-tax revenues remain "the backbone forming about 60-70% of total revenue receipts", the CMO said, adding that "significant contributions" come from commercial taxes, excise duties and motor vehicle taxes.

The report recommends introduction of auction-based digital licensing for excise focussing on transparency and efficiency.

Krishnan has also recommended rationalising and increasing user charges in utilities "transitioning to volumetric billing with robust regulatory support and automatic indexation of user charges to inflation".

Right now, the government faces "challenges in local finance due to outdated guidance values and inadequate property tax revisions".

The report also asked the government to create an economic policy wing within the finance department to monitor non-tax revenues and asset monetization. This is apart from strengthening institutional capacity by building capabilities and periodic property surveys.

"Karnataka continues to show robust economic growth outperforming many states in India," the CMO said.

"The report underscores safeguarding growth-enhancing expenditures on infrastructure, education and health while improving expenditure efficiency. It calls for systematic reforms in revenue mobilization to sustain Karnataka’s fiscal robustness and inclusive growth trajectory," the CMO added.