Never was Budget formulated in such a difficult situation: B S Yediyurappa

Karnataka Chief Minister B S Yediyurappa on Monday said the budget of the state was never formulated in such a difficult situation previously, as he cautioned about the challenges ahead in 2021-22. "Our government has faced many challenges during 2020-21. Though there are clear indications of recovery of green cover, the year 2021-22 may also bring various kinds of challenges."

"The 14 per cent expected growth we were considering year on year in revenue receipts will not be there during the next year," Yediyurappa said. Presenting the Budget, he said in similar manner, the responsibilities taken to manage Covid-19 will have its own consequence in 2021-22. This made the preparatory process of the budget very difficult.

The central government has permitted the states to obtain loan up to four per cent of the GSDP during 2021-22, the Chief Minister said. Accordingly Bill will be presented in the present Legislative Session to bring an amendment to the Karnataka Fiscal Responsibility Act 2002.

"The budget of the State was never formulated in such a difficult situation previously.In spite of this, I am presenting this budget with positive thoughts having the aim of achieving the developmental dreams," he added.

Yediyurappa, who also holds the Finance Portfolio presented the state budget, his eighth, in the assembly today.

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Noting that revenue resources of the state include state's own tax, non tax receipts, share from central taxes and grant-in-aid from the centre, Yediyurappa said, state and central government's tax collections are lesser than the budgetary estimates due to complete stoppage of economic activities on account of COVID-induced lockdown.

Hence, the share of the state in central taxes has come down to Rs 20,053 crore in the revised estimates from the budgetary estimates of Rs 28,591 crore in 2020-21, he said.

Due to all these reasons it has become difficult for state's revenue resources to reach the targets of 2020-21, he said. He pointed out the central government has stated in its 2021-22 budget that the share from central taxes to be provided to the state will be Rs 24,273 crore.

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Further noting that due to Covid-19 there was a decline in the collection of state GST, Yediyurappa said the central government has to pay this loss as GST compensation. Since GST compensation cess collection was not as per expectations, it has informed that it will take loan and allocate it to states and repayment of loan will be done through compensation cess collection, the chief minister said.

During 2020-21, the Centre has said a loan of Rs 12,407 crore will be taken and paid to the state as GST compensation, he said.

The central government has facilitated the states to obtain loan up to five per cent of the GSDP during 2020-21 for facing the economic crisis arisen due to Covid-19, he said. Accordingly, to avail this facility, Karnataka has brought an amendment to the Karnataka Fiscal Responsibility Act 2002, and keeping in mind the adverse impact on state finances, current year borrowing has been restricted within four per cent of GSDP.

As per the 15th Finance Commission report for the period 2021-26, the state will be receiving a share of taxes at 3.64 per cent, Yediyurappa said. The Commission has given to the state an amount of Rs 3,548 crore for local bodies, Rs 791 crore to the State Disaster Relief Fund and Rs 1,631 crore as Revenue deficit grant in its report for 2021-22.

Besides this, the Commission has recommended Rs 3,000 crore for peripheral ring road for Bengaluru city and Rs 3,000 crore for comprehensive development of tanks and other water resources of the state, he said. The government will strive to obtain the grants recommended by the 15th Finance Commission, the chief minister asserted.