Karnataka: Bitter pill in BSY Budget today?

Chief Minister B S Yediyurappa, who will present his seventh Budget on Thursday, is expected to walk a tightrope.

With an eye on the fiscal deficit, the CM is expected to earn brownie points by announcing some new schemes, but there are indications that he may steer clear of big-ticket projects.

The size of the 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 Yediyurappa with little room for fiscal manoeuvring, officials say. However, they say irrigation and agriculture will get priority.

Given that the state is facing financial constraints — something Yediyurappa himself has admitted — the CM may consider some revenue generation measures that could burden the common man, which can include an upward revision of excise duty and cut in some subsidies. Other measures such as revision of various licensing fees are also being explored to generate enough revenue to make up for bulging expenditure.

Earlier this week, Yediyurappa told reporters during an informal chat that over 70% of the expenditure goes toward salaries, pensions and subsidies. "We are in a tough position, financially, especially with subsidies growing," he said. "We are discussing the reduction in quantum of free rice under the Anna Bhagya scheme from 7 kg to 5 kg," he said, adding that some other (cheaper) grain can be provided in lieu of rice.

The decline in the state’s share of Central taxes and own revenues are expected to cast a shadow on the Budget. Under the 15th Finance Commission, Karnataka will get Rs 11,000 crore less by way of devolution of taxes, which will have an impact on developmental works. Yediyurappa said he will visit Delhi later this week to hold talks with the Centre on this issue.

Plus, a dip in revenue of two key departments — Transport and Stamps & Registration — will also have a bearing on the Budget. Economic slowdown has resulted in the state's transport revenue as well as property registrations to come down.

The BJP government went on to face the exigency of the August 2019 floods, which bled its finances. It is said that the Budget might offer some relief to flood-hit areas, even as the Opposition has attacked the government for not doing enough to tackle the calamity.