Yediyurappa presents please-all budget

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S. Rajendran

Nod for staff pay hike; farm loans up to Rs. 25,000 waived

BANGALORE: The Janata Dal (Secular)-Bharatiya Janata Party (BJP) coalition Government in Karnataka has presented a populist budget with hardly any fresh taxes. The highlights of his please-all second surplus budget are the blanket ban on the manufacture and sale of arrack, making the State lottery free, and the waiver of cooperative farm loans up to Rs. 25,000.

Deputy Chief Minister B.S. Yediyurappa, who holds the Finance portfolio and who presented the Rs. 73.31-crore surplus budget, said the State would not borrow during the next financial year.

In its second budget, the coalition Government has tried to keep its promise to farmers. While continuing loans to farmers at 4 per cent interest, the Government has waived all agricultural loans up to Rs 25,000 with effect from April 1, 2006. For those who have already cleared their loans (up to Rs. 25,000), the loan amount will be converted into a fixed deposit for three years with 4 per cent interest rate. For farmers who have obtained loans above Rs. 25,000, the interest will be waived if the principal amount is repaid before March 31, 2007.

Grant to be sought

The Government has announced the implementation of the D.M. Nanjundappa Committee Report on Regional Imbalances. A sum of Rs. 1,571 crore has been allocated for the scheme and the State is likely to seek a matching grant from the Centre.

The State Government has decided to implement the Fifth Pay Commission report for its six lakh employees and pensioners with effect from July 1, 2005. While the revised scales will be paid from April 1, 2007, the arrears would be paid in September.


Paddy, rice, wheat and pulses and products of wheat and rice have been exempted from Value Added Tax for another year. The tax on tyres and tubes of tractors, software licences and used motor vehicles has been reduced to 4 per cent from 12.5 per cent. The Government has increased the taxes on new motor vehicles (two-wheelers and four-wheelers) by 1 per cent.

Mr. Yediyurappa said fiscal correction over the last few years had ensured financial stability in the State.

The revenue targets set for most departments had been surpassed, and The State Excise is expected to net Rs. 4,400 crore, despite the loss of Rs. 1,905 crore on account of the ban on arrack. The target for excise for the coming year has been fixed at Rs. 3,300 crore. Similarly, with the increase in taxes on motor vehicles expected to fetch an additional Rs. 75 crore, the target for the Motor Vehicles Department for the coming year has been fixed at Rs. 1,560 crore. The ban on all paper and internet lotteries was expected to cause a loss of Rs. 250 crore revenue.

He said the main objective of the budget was that the State should achieve a growth rate of over 10 per cent in gross domestic product, and over 4 per cent in the agricultural sector, to surpass the national average.

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