Even during normal times, the State Budgets of the country are largely a political exercise of fiscal adjustments without much policy restructuring. In the face of an unprecedented fiscal crunch, therefore, expectations from the Karnataka Budget for 2021-22, presented in the Legislative Assembly on Monday, were indeed muted. The only curiosity was whether it would offer anything drastic in terms of reordering of priorities or rationalisation of expenditure, taking advantage of what appears to be an economic crisis gripping the State.
The Budget, however, had no such bitter medicine. If the Union Budget this year, as commended by a Nobel laureate in economics, went against the grain of throwing a little bit of money at everything and focussed on select supply side measures to reinvigorate a sagging economy, the State Budget seems to have done just the opposite.
Unmindful of deficit
Undaunted by bleak revenue prospects, it has chosen to tread the beaten path of offering a little bit to every single constituency that matters politically for the current dispensation. The Budget speech — which was, at 96 pages, just one page shorter than the Budget speech of the previous year — read in parts like a sociological text as it virtually listed out every major caste group in the State and set aside a token grant for each. Unmindful of a whopping revenue deficit of ₹15,133 crore, the Budget has set apart ₹10 crore for a guest house in the vicinity of the Ram temple under construction in Ayodhya and announced yet another caste-based corporation, while doling out grants to the ones already set up.
As the revenue sources have dried up and the constitutionally mandated devolution of funds from the Centre has shrunk drastically, the State is financing its largesse by borrowing more. The proportion of borrowings in the total receipts is slated to go up from 22% in 2020-21 to 29% in 2021-22. The share of debt-servicing in total expenditure will increase from 15% to 18%. The share of the State’s own taxes is estimated to drop to 50% of the total receipts, as against 54% during 2020-21. To please all is a permanent State policy, but in a year when the State will have to borrow to meet even its day-to-day expenses, one would have expected more prudence and sharper priorities in public expenditure.
There are three specific areas where any keen observer of the State’s economic affairs would have wanted this Budget to be a bit more definite, even in these gloomy times.
Little for farmers
Firstly, as a follow-up to the recent amendment to farm laws that had led to widespread unrest among farmers, the Budget was expected to present a plan to prepare farmers to cope with the fallout of the new laws. The Budget makes a few stray mentions about setting up and strengthening storage facilities and marketing infrastructure, but presents barely anything coherent to help farmers deal with a privatised farm market.
Secondly, the Budget was also expected to present a roadmap or vision for the implementation of the new education policy. Here, the Budget proposes only awareness programmes about the policy, besides repeating a few familiar commitments.
Finally, expectations about some innovative measures for tapping non-tax revenue to offset the shortfall in tax revenue have also been belied. The only solace is that the Budget has not imposed any fresh levy. Overall, as a document of development policy, the Budget comes across as a bunch of recycled schemes. And as a statement of fiscal management, it is a bunch of statistics, all of which are set to be revised eventually.
(The author is an associate professor with Azim Premji University. He is a policy researcher and political commentator)
