Karnataka CM BS Yediyurappa to keep 2020-21 Budget grounded

The size of Karnataka’s 2020-21 Budget is likely to hover around Rs 2.40 lakh crore, the same as last year, because spillover expenditure and bulging subsidies could leave Chief Minister B S Yediyurappa with little room for fiscal manoeuvering, officials say.

Yediyurappa is slated to present the 2020-21 Budget on March 5. This will be the first budget of the current BJP government that came to power last year. As chief minister, this will be Yediyurappa’s fifth budget.

“The way things stand, the total size of the budget will more or less be the same as the 2019-20 budget. At best, it may go up by Rs 5,000-10,000 crore,” a senior official in the Chief Minister’s Office (CMO) said.

Irrigation is one sector where the government’s committed expenditure is so huge that it is very difficult to take up new programmes. “In the last 5-6 years, irrigation projects have been approved beyond the approved budget, which means the government will have to foot those bills,” the official explained. In the 2019-20 budget, the outlay for irrigation, or the water resources department, was Rs 17,212 crore.

One estimate is that the government needs Rs 53,000 crore to complete irrigation projects that have been sanctioned.

That apart, Karnataka spends Rs 22,900 crore on various subsidies, a 53% increase from six years ago. Rising subsidies and the push for direct benefit transfer (DBT) schemes are challenges Yediyurappa faces. “The chief minister will have to take a tough stance and cut down subsidies. But then, this will lead to political backlash because the beneficiaries, after all, are the voters,” the official said.

Major subsidy outgo is on free electricity to farmers to use agricultural pump sets, food subsidy, interest subsidy for crop loans and transport. According to sources, doing away with some of the subsidies had been discussed, but without any conclusion.

Burdened by the crop loan waiver, the HD Kumaraswamy-led government had presented a deficit budget in 2019-20. The BJP government went on to face the exigency of the August 2019 floods, which bled the finances. Plus, shrinkage in the state’s share in the divisible pool of Central taxes and delayed GST compensation add to the worry.

Given all this, officials say that Yediyurappa may not announce too many new schemes.

Bengaluru boost?

There is some indication that Yediyurappa may announce measures to boost mobility in Bengaluru, a city that is billed to have the worst traffic in the world. “Various options are before the table, but nothing is finalized. But the CM is keen on addressing, in the budget, the mobility situation,” the senior official said.