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Karnataka
By Our Special Correspondent
The Plan aims at eliminating revenue deficit at the end of the five-year period and reducing fiscal deficit, which had been placed at 3.66 per cent when the Budget for 2001-02 was prepared, to three per cent during 2004-05. The Plan had estimated the revenue deficit for 2000-01 at 1.49 per cent of the Gross State Domestic Product (GSDP), and said that borrowing should not be used to finance current expenditure. It had also aimed at reducing fiscal deficit from 3.66 per cent of the GSDP in the base year to three per cent by 2004-05 to stabilise debt stock and prevent an increase in interest payments. In the Budget presented today, it has been stated that 17 paise in every rupee of State expenditure goes for debt servicing. Presenting the Budget, the Chief Minister said that the State was in the third year of fiscal reforms. Owing to a bad revenue year and a severe drought in 2001-02, the Government was unable to adhere fully to the fiscal targets under the Medium-term Fiscal Plan. The power sector had become a major area of fiscal concern for him. It was largely due to the inability of the sector to deliver on reforms that the Government was unable to draw the third tranche of the Karnataka Economic Restructuring Loan of Rs. 1,200 crore. The loss had been compounded by an estimated revenue shortfall of about Rs. 1,600 crore due to short collections in taxes and non-taxes, and short receipts in Union Government devolution.
Ministers praised
Despite the constraints, the revised estimates for 2002-03 indicated that the Government had been able to contain the deficits within the targeted limits. Mr. Krishna complimented his ministerial colleagues and the departments for containing expenditure within the revised estimates, which were inevitable in the light of the severe resource constraints. "As a responsible Government, we will have to continue with the regimen of fiscal discipline within the framework of the Fiscal Responsibility Act passed by the House," he said. Mr. Krishna said the results were there for all to see. Though the revenue receipts had fallen from an estimated Rs. 18,798 crore to Rs. 17,101 crore in 2002-03, expenditure had been reduced from Rs. 24,840 crore to Rs. 23,747 crore. The fiscal deficit had been pegged at Rs. 5,637 crore as against the target of Rs. 5,839 crore. The fiscal outlook for 2003-04 was encouraging. He had tried to assess realistically the State's own resource mobilisation. It had been his effort to prune non-Plan non-development expenditure. Rightsizing government expenditure, particularly by reducing expenditure on the non-Plan side, was the key challenge in achieving fiscal sustainability. It was necessary to release scarce resources from the non-Plan side to enhance Plan allocations for development in key sectors such as agriculture and horticulture, rural development, and welfare of the underprivileged. His aim was to restrict the fiscal deficit to the target of Rs. 6,269 crore set in the Mid-term Fiscal Plan. The success of the Budget depended on the adherence to the Fiscal Responsibility Act, he added.
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