Budget '06 reflects improving finances

The state budget proposals by deputy chief minister and finance minister Siddaramaiah for the year to March 31, 2006 were broadly seen to reflect Karnataka's improving financial health, despite concerns over a Rs 1,750 crore subsidy to the state-owned power sector.

The state continued to be among the best-prepared to implement the value added tax regime, come April, and better-than-expected tax collection buoyed Siddaramaiah's plans for expenditure on various fronts for the coming year.

Notably, allocations were increased for education (11 per cent) and health (18 per cent), soft targets in times of fiscal stress. Allocation for irrigation, at Rs 3,942 crore, is up 30 per cent.

For the current fiscal, commercial taxes, which accounted for nearly a third of the state's tax revenues, grew 27 per cent to Rs 11,998 crore. Total taxes, including such heads as excise, stamp and registration, grew 21 per cent to Rs 15,747 crore in the revised estimate.

Gross revenue surplus this fiscal is estimated at Rs 507 crore. Revised estimates for the year puts total revenue receipts at Rs 33,332.84 crore, about 4 per cent more than the budget estimate. After revised expenditure of Rs 33,273 crore, the closing balance for the year would be Rs 72.66 crore, Siddaramaiah said.

For meeting the targets, of removing revenue deficits and limiting fiscal deficit, set by the Karnataka Fiscal Responsibility Act the Centre has given the state a Rs 185 crore 'Fiscal Incentive Grant'.

For the coming year, Siddaramaiah anticipates a "consolidated" revenue surplus of Rs 63.44 crore after paying an interest of Rs 791 crore on off-budget borrowing. The fiscal deficit is estimated at Rs 4,714 crore, or 2.86 per cent of the GSDP, which is less than the 3 per cent limit under the Fiscal Responsibility Act.

A significant reduction this fiscal in the state's expenses on "general services", which includes salaries of government employees, also boosted Siddaramaiah's intention to stay the path of fiscal consolidation with his proposals.

The expenditure was estimated, at the beginning of the year to be Rs 11,475 crore. It has now been revised to Rs 10,300 crore.

Siddaramaiah has proposed a Karnataka Sate Industrial Development Council, under the chairmanship of the chief minister, to facilitate accelerated industrial development.

Allocation for "industries and mining" this time is Rs 143 crore, up 36 per cent. Other increases in allocations include public works (38 per cent to Rs 1,414 crore) and urban local bodies (45 per cent to Rs 1,160 crore).