 "Karnataka Budget: CM keeps funding for social sectors")
Saying he was concerned at the reduced allocation in all central sector schemes, despite a higher devolution of funds recommended by the 14th Finance Commission (FFC), he announced several measures to increase revenue. As against the expectation of Rs 11,721 crore of central grants, the state would get Rs 7,031 crore in FY16, he said.
“The central (government) Budget revealed that while giving more through central devolution, they have equally reduced their support to central sector schemes,” said the CM. To raise more money, he proposed to raise the excise duty on Indian Made Foreign Liquor between six per cent and 20 per cent across 17 slabs, and raised the value added tax on diesel and petrol by one per cent. VAT was also raised from the present 17 per cent to 20 per cent on cigarettes, cigars and gutkha.
The CM complained that the FFC reliance on the methodology of the Central Statistical Office for estimation of Gross State Domestic Product (GSDP) had grossly undervalued the contribution of the information technology sector in Karnataka. The gross value added of the sector here had been assumed by the CSO at only 15-16 per cent, while the state’s share of software exports was 33 to 35 per cent, he said. This had led to the under-estimation of GSDP. The permissible borrowing capacity, measured as a proportion of GSDP, had come down substantially on account of this, he said.
According to the state government’s calculation, its overall “net loss” between what it thought it should get from the Centre this year, from its share, grants and the FFC recommendations, and what it is actually getting is close to Rs 2,000 crore. The budget says GSDP grew seven per cent in 2014-15, from five per cent in 2013-14. The service sector grew 8.9 per cent and the industrial sector is expected to grow at 4.4 per cent. Despite the drought in many taluks, the agriculture sector is estimated to grow by 4.5 per cent.
Size
The overall budget size has increased 7.3 per cent to Rs 142,534 crore for 2015-16, compared to the revised estimate (RE) of Rs 132,835 crore for 2014-15. The annual plan size has gone up 10.6 per cent to Rs 72,597 crore. It State Budgetary Resources of Rs 67,882 crore and Rs 8,645 crore from the resources of public sector enterprises.
Total receipts are estimated to be Rs 139,476 crore in FY16. The budget estimates revenue receipts of Rs 116,360 crore and capital receipts of Rs 166 crore, including borrowing of Rs 22,950 crore. The total expenditure is estimated at Rs 142,534 crore, consisting of revenue expenditure of Rs 115,450 crore, capital expenditure of Rs 20,564 crore and debt repayment of Rs 5,788 crore. The fiscal deficit is expected to be Rs 20,220 crore or 2.75 per cent of GSDP. Total liabilities at Rs 180,815 crore at the end of 2015-16 are estimated to be 24.56 per cent of GSDP. “This is within the limit of 25 per cent for 2015-16 mandated in the Karnataka Fiscal Responsibility Act and reflects (our) fiscal responsibility,” Siddaramaiah said.
Resource mobilisation
The state’s total tax revenue for 2015-16 is estimated to be Rs 101,235 crore, a rise of nearly 21 per cent over the RE for 2014-15. The state is expected to mobilise Rs 5,206 crore from non-tax revenues. The share in central taxes is Rs 24,790 crore and another Rs 9,919 crore is shown as grants from the central government.
These revenue receipts are estimated to be supplemented by gross borrowings of Rs 22,950 crore, non-debt capital receipts of Rs 75 crore and recovery of loans to the extent of Rs 91 crore. Various state-owned boards, corporations and local bodies are expected to mobilise Rs 8,645 crore, through internal generation and borrowing on the basis of their own financial strength.