Hike in taxes unlikely in Budget; poll-bound areas to get focus

Chief Minister B.S. Yediyurappa, who will be presenting the State Budget for 2021–22 on Monday, is expected not to increase the taxes on fuel and other essential commodities. With a shortfall in revenue this year owing to COVID-19, however, the Budget is also unlikely to give relief to consumers by reducing taxes.

The Budget is expected to offer concessions to small businesses/industrial units for resumption of economic activities. Programmes under the Atmanirbhar Bharat and health and infrastructure sectors are expected to get a boost.

Bypoll impact

Keeping an eye on the bypolls in three Assembly segments of Basavakalyan, Maski and Sindagi and the Lok Sabha constituency of Belagavi, Mr. Yediyurappa is expected to announce a slew of projects in these constituencies. The ECI, which deferred announcement of the poll dates to these constituencies last week, may announce the calendar of events after the presentation of the Budget.With elections to the Bruhat Bengaluru Mahanagara Palike council likely to be held this year, Bengaluru, which contributes more than 60% of the State’s revenue, is expected to get huge funds for infrastructure. As legislators from the Kalyana Karnataka region have been flagging the issue of lack of funds, the region may get priority.

Focus on women

Since the Budget is to be presented on March 8, which marks International Women’s Day, the Chief Minister has promised to give priority to women’s welfare. A large number of women working as anganwadi and ASHA workers, who played a vital role in the containment of COVID-19, are expected to get increased allowances.

The Budget numbers during 2020–21 have undergone massive revisions as the State has had a shortfall in revenue collection amid the pandemic and constrained economic activities for most of the months. To overcome the shortfall, the government is expected to raise borrowings in the form of special development loans from the RBI and other sources such as NABARD. By increasing the borrowing limit from 3% to 5% of the GSDP by the Centre, the State is expected to borrow nearly ₹86,000 crore this year (2020–21).

Fuel taxes

However, increase in fuel prices is likely to compensate to some extent the shortfall in revenue collection in commercial taxes, motor vehicles, stamps and registration, and excise.

Hike in fuel prices — the prices have increased 21 times in 2021 — would result in the State mopping up an additional ₹2,500 crore annually.

Revenue from taxes on fuel will fetch ₹15,000 crore in 2020–21. The State has imposed 35% taxes on petrol and 24% on diesel. Collections from commercial taxes is expected to cross ₹70,000 crore against the target of ₹82,443 crore for the year 2020–21.

The Budget is expected to give focus on reducing committed expenditure, including salaries, pensions, subsidies, and interest payments, which is nearly 90% of the State revenue by introducing administrative reforms.

Subsidy cuts

With huge amounts going the way of subsidies, the Budget is likely to announce measures to crack down on “bogus beneficiaries” of pensions, ration cards, and subsidies under various welfare schemes. The subsidy amount has already started coming down in food, electricity, education, housing, and other welfare schemes.

The CM, presenting his eighth Budget, has hinted that the Budget size would be slightly bigger this time, considering that the State has been allowed to borrow more. The size in 2020-21 was ₹2,37,893 crore.

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Printable version | Apr 22, 2021 12:11:55 AM | https://www.thehindu.com/news/national/karnataka/hike-in-taxes-unlikely-in-budget-poll-bound-areas-to-get-focus/article34009284.ece

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