No fresh taxes in Karnataka budget

Karnataka chief minister S M Krishna presented a deficit budget for 2004-05, without imposing any fresh taxes.The state is keen to go in for early polls in line with the Lok Sabha elections.

Politics has impinged on the state's finances in a big way with the chief minister accusing the Centre of "step- motherly treatment" leading to the denial of the 2002-03 tranche of the World Bank structural adjustment loan of Rs 1,200 crore.

The Centre "inexplicably... called off" the loan negotiations even though the bank had "recommended the loan for Karnataka," said Krishna.

"Despite three successive years of drought, the state has been able to sustain a fiscal reforms programme. The fiscal deficit is down to 4.26 per cent in 2003-04, against 5.36 per cent in 2001-02, and the revenue deficit is down to 1.01 per cent in 2003-04 from a high of 3 per cent in 2001-02," Krishna said.

The projected deficit for the coming year (2004-05) stands at Rs 153 crore, which the chief minister, who also holds the finance portfolio, expects will be covered through savings in expenditure and tax buoyancy.

In the current year, the deficit is set to quadruple to Rs 401 crore (revised estimates) compared to Rs 106 crore projected in the Budget estimates presented last year.

The chief minister took credit for a robust tax effort in the current year when additional resource mobilisation exceeded Budget estimates by Rs 374 crore, without levying of any additional taxes.

Commercial tax collection, the mainstay of state governments, has gone up by 21 per cent in the first nine months of the current year, compared to the entire revenue of the previous year.

This, he said, was the highest in the country.

On the expenditure side, the state would be making a saving of Rs 200 crore through the debt swap organised by the Centre under which older high yielding papers had been exchanged with fresh papers issued at current rates of interest, along with a bonus for the states. Foregoing of dearness alowance by state government employees had saved another Rs 200 crore.

As part of the state's efforts to tackle droughts in successive years, Krishna announced the setting up of two new state corporations. The Karnataka Krushi Abhivruddhi Nigam would be set up to tackle drought in the state.

A Karnataka Minor Irrigation Corporation would also be set up. Both the projects have been allotted Rs 100 core each in the coming financial year.

In view of the success of women's self help groups which have between themselves mobilized Rs 150 crore in savings, the state has decided to set up a Stree Shakti Grameena Bank. The 35,000 self help groups will be given Rs 5,000 each as share capital in this bank.