In view of the continued financial challenges in Karnataka, the Cabinet on Friday approved the Karnataka Fiscal Responsibility (Amendment) Bill, 2022.
The Bill seeks to give some leeway to the government by increasing the fiscal deficit ceiling to 3.5 per cent and by permitting the state’s debts to go beyond the stipulated limit of 25 per cent of the GSDP. It also provides for a revenue deficit. As per the Fiscal Responsibility Act 2002, the state government is expected to always maintain a revenue surplus.
In the recently presented Budget 2022-23, Chief Minister Basavaraj Bommai had projected the Revenue Deficit for the fiscal 2022-23 to be Rs 14,699 crore. While the Fiscal Deficit is expected to be Rs 61,564 crore (3.26% of GSDP), the total liabilities at the end of 2022-23 is estimated to be Rs 5,18,366 crore, which is 27.49% of the GSDP, he had stated.
The government has said it has faced a huge financial challenge owing to the Covid-19 pandemic, pushing the state to a situation of revenue deficit and with an increase in its debts.
The present amendment seeks to increase the existing caps as per the Fiscal Responsibility Act 2002. The state government had brought in a similar amendment in the last financial year and the year before that too. This is a one-time amendment and is applicable to the fiscal 2022-23, according to sources in the Law department.
Watch latest videos by DH here:
Published 11 March 2022, 18:59 IST