Loan-waiver to be focus of CM's budget

All eyes will be on Chief Minister H D Kumaraswamy on Thursday on how he will sustain what is touted as the biggest crop loan waiver in the history of Karnataka without derailing the economy.

According to the decision of the Coordination and Monitoring Committee of the coalition government, Kumaraswamy, will announce in his budget a huge crop loan waiver, which is likely to cost the state exchequer a whopping Rs 30,000 crore.

The maiden budget of the coalition government to be presented at 11.30 am in the Legislative Assembly, will be a full-fledged one for the remaining part of the current fiscal and is likely to incorporate several “bhagya” schemes announced by the previous Congress regime.

But what is worrying for the common man is that Kumaraswamy who also holds the Finance portfolio, may pass on the burden of the crop loan waiver, at least a part of it, to them in the form of Additional Resource Mobilisation (ARM) measures. While Kumaraswamy has been stating that he will announce the waiver of loans availed by farmers from nationalised and cooperative institutions, he has remained silent on how he will source the scheme.

Kumaraswamy cannot tinker with the Goods and Services Tax slabs as they are fixed by the GST Council. He may increase excise duties on liquor and beer (a measure taken by his predecessor Siddaramaiah), increase motor vehicles tax and impose some cesses as part of ARM measures.

Moreover, implementing the recommendations of the 6th Pay Commission will cost the government an additional Rs 10,508 crore this fiscal.

Kumaraswamy may also go in for huge market borrowing to fund infrastructure projects, especially in Bengaluru, for he has a formidable task of keeping voters happy with the Lok Sabha polls just 10 months away. A poor deal for the state capital is bound invite an instant backlash.

At the same time, he cannot ignore rural areas, the traditional stronghold of the JD(S). All said and done, it will be a tight-rope walk for Kumaraswamy for several contentious issues between the alliance partners — the Congress and the JD(S) — like increasing the pension for aged persons and downsizing certain subsidy schemes announced by the previous government have remained unresolved.

While the Congress has been insisting that all schemes launched by the previous government should be continued, the JD(S) wants to cut down on expenditure on some of them to mobilise resources for loan waiver.

The common minimum programme of the coalition government also speaks about Rs 1.25 lakh crore for irrigation, new schemes like 20 lakh houses for the homeless and jobs for one crore youths in the next five years, which Kumaraswamy will have to incorporate in the budget.