Karnataka budget announces ₹34,000 crore farm loan waiver, increase in taxes on fuel

Chief Minister H.D. Kumaraswamy proposes  'Compete with China' scheme.

Updated - July 05, 2018 05:15 pm IST

Published - July 05, 2018 10:44 am IST - Bangalore

Karnataka Chief Minister H.D. Kumaraswamy presents the State budget at Vidhana Soudha in Bengaluru on July 5, 2018.

Karnataka Chief Minister H.D. Kumaraswamy presents the State budget at Vidhana Soudha in Bengaluru on July 5, 2018.

Karnataka Chief Minister H.D. Kumaraswamy on Thursday presented the Congress-JD(S) coalition government’s maiden budget, announcing farm loan waiver worth ₹34,000 crore.

The budget, however, has increased the rate of tax on petrol from the present 30% to 32%, hiking petrol prices by ₹1.14 a litre and the rate of tax on diesel from the present 19% to 21%, hiking its price by ₹1.12 a litre.

In the run-up to the recent Assembly polls, the Kumaraswamy-led JD(S) had promised to waive farm loans borrowed both from cooperative and nationalised banks within 24 hours of coming to power.

Here are the live updates:


“Farmer and Rural Economy-oriented Budget”

Bangalore Chamber of Industry and Commerce (BCIC) termed the Karnataka State Budget as a “Farmer and Rural Economy-oriented Budget” as the new Congress-Janata Dal (Secular) coalition Government proposed waiver off crop loans upto ₹2 lakh and allocated ₹150 crore for adopting Israel-model for crop development in the State.


Farmers hail announcement on zero budget natural farming

Karnataka Natural Farmers Association has welcomed the budget announcement to support zero budget natural farming (ZBNF). The association president Ishwarappa Chakote and member Chandrashekar Kadadi told The Hindu that this would be a long-term welfare measure for farmers.

"I have been practicing ZBNF for 20 years now. My cost of cultivation has reduced significantly while the returns have improved steadily. It can be practiced in all agro-climatic zones," Mr. Kadadi said.



Coastal region MLAs protest

Soon after budget presentation, MLAs from the coastal districts raised objections saying their region has been paid no attention. One MLA held up a placard expressing displeasure over this.

The budget announces that three public industries that have making profits for many years now will issue IPOs and go public this year. However, the budget doesn't name these 3 public industries.


Factory for old phones

To separate component of old mobile phones, the State has proposed to establish an industry for mobile phone components will be established in Chikkaballapur. The State sees an opportunity to separate component of 3 crore old phones.

The State government has proposed to establish ICB chip manufacturing unit in Mysuru.


Fiscal deficit and liabilities increase

Compared to the budget presented by former CM Siddaramaiah in March 2018, the budget presented by H.D. Kumaraswamy has increased fiscal deficit and also liabilities of the State. The gross borrowings in the earlier budget was ₹39,328 crore while the gross borrowings has increased to ₹47,134 crore in the budget presented on Thursday. The fiscal deficit is pegged at ₹40,753 crore i.e. 2.89% of the GSDP, up from 2.49% in Siddaramaiah's budget. Total liabilities of the State has increased from ₹2.86 lakh crore to ₹2.92 lakh crore, which is 20.75% of the GSDP.

However, both fiscal deficit and liabilities of the State are well within the parameters set by the Karnataka State Fiscal responisibility Act.


Manufacture cluster  in Koppal district to challenge Chinese toys

To compete with the Chinese, the government has proposed to establish a cluster of toy-making units in Koppal district. The budget states that toys operated with battery and electricity have entered the market and ICB, chip, micro DC motor are incorporated in them.

“There is a world market for such toys. In China, these mechanised toys are manufactured and supplied to the entire world. In this background, a  challenge to Chinese toys, it is proposed to establish a cluster for manufacture of toys in Koppal district.”


'Compete with China' scheme

To compete with China-made goods, the budget has proposed to establish a programme mission unit. Spare parts will be manufactured at the village level, assembled at the taluk level and malls will be opened to market these goods. For this purpose plug and play industrial sheds will be constructed.

The manufacturing industry of household LED lights will be developed in Chitradurga district. At present such lights are imported from China.

The government proposed to develop Hassan district as bathroom floor tiles and sanitary goods manufacturing district to compete with the Chenese.


Institute to find alternate for plastics

The budget proposes an Alternative Packing Technology Development Institute at a cost of ₹5 crore to develop packing technology using bio-degradable material other than plastic. The institute will also impart training for the same. This comes in the wake of the complete ban on production and sale of certain types of plastic in the State.

A science centre is to be set up in the name of H. Narasimhaiah, rationalist and science teacher, at Gauribidanur. The late Mr. Narasimhaiah was a well known crusader against superstitious beliefs.



Brahmin development board

The government proposed the formation of a Brahmin development board with an allocation of ₹25 crore. It also announced a slew of financial allocations for various community-based religious institutions.

The total allocation for various religious institutions is pegged at ₹25 crore. The budget lists a total of 17 such religious mutts as recipients of these grants.


Medical college for Ramanagara

The budget proposes to establish a medical college in Kanakapura of Ramanagara district. Incidentally, Medical Education Minister D.K. Shivakumar is an MLA from Kanakapura. The budget also grants ₹40 crore to establish a 300-bed super speciality hospital in Ramanagara. The Chief minister too won from both the Chennapattana and Ramanagara seats in the recent Assembly elections, but retained Chennapattana.

Ramanagara, from where Kumaraswamy has been elected multiple times in the past, is considered a strong hold of the Deve Gowda family. It is all set for a by-election soon.


Encouraging electric vehicles

The cash-strapped Bangalore Metropolitan Transport Corporation (BMTC) has received a relief from the State government. The budget has proposed a direct subsidy of ₹100 crore to the corporation.

The city will have 100 charging units set up at cost of ₹4 crore to encourage electric vehicles.

The government proposed to establish an Integrated Road Transport Authority for Bengaluru city. It will be headed by the Chief Minister. iT will formulate a comprehensive working and action plan by coordinating with BMRCL, BMTC, BDA, BBMP and other agencies to establish a hassle-free easy transport system at affordable rates.

A sumof ₹50 crore has been set aside for the rejuvenation of the Bellandur lake.


Detailed report commissioned for "Jaladhare"

The budget commissions a Detailed Project Report for a ₹53,000 crore worth mega project, “Jaladhare”, which involves drawing water from various rivers and reservoirs and supply after purification to villages for drinking purposes. The budget says the government is committed to implementing the project in phases over the next five years to permanently solve the problem of drinking water in rural areas. However, the budget doesnt specify the funds earmarked for the same.

The budget also allocates ₹2,000 crore each for Tumakaru and Bidar districts to set up a sports equipment industry with an aim to create 1 jobs and agriculture equipment industry.


Fuel prices to go up

Mr. Kumaraswamy has included a host of tax hikes in the budget, which he has argued as necessary steps to “augment resource mobilisation” towards fulfilling the promise of loan waiver to farmers.

The Chief Minister said even with this hike the prices of petrol and diesel would be lower in Karnataka when compared to the neighbouring States.



Approval for phase 3 of Bengaluru metro

Another salient feature of the budget is the approval of the phase 3 of the Bengaluru metro. The Phase 3 will extend the phase 2 network by 75 km and ₹15825 crore will be spent on six elevated corridors. The announcement of elevated corridors in the previous government had lead to widespread protests in the city.

A special B.Ed training college to train teachers for special needs children is to be set up in Indira Nagar, Bengaluru.

The Chief Minister  also announced a whole list of schemes for enterprises​ to compete with the manufacturing capacity of China, including solar panels, sanitary products and mobile phone components.


'Mathrushri scheme' for pregnant women

The Chief Minister announced a scheme, named 'Mathrushri', to transfer money directly to the bank accounts of pregnant women from the BPL families. A sum of ₹350 crore will be set aside for the same and it will be implemented from November 1.

Mr. Kumaraswamy had announced that he would provide ₹6000 monthly allowance for pregnant woman from the BPL families in the run-up to the polls. Though he has initiated Chief Minister's Mathrushree Scheme to the effect, the allowance is only ₹1000 a month, which will be directly transferred to the Aadhaar-linked bank account of pregnant women of the BPL families for three months prior to the delivery and three months for the lactating mother.

The Chief Minister assured that this monthly allowance will be increased in a phased manner over the next five years. This allowance was in addition to the benefits under the  government's ''Matru Poorna'' and the central government's ''Matru Vandana'' schemes.

Meanwhile, ''Anna Bhagya,'' the flagship scheme of former Chief Minister Siddaramaiah, gets a cut. The provision for 7 kg free rice has been reduced to 5 kg. 

The Chief Minister also announced ₹25 crore for various religious institutions in the State, spread across castes.


Boost for tourist sector

Mr. Kumaraswamy announced packages to boost the tourisim potential of the State

The tourism department will focus on Belur, Hampi, Vijayapura by introducing two-year diplomas for tour guides to help tourists in various languages.  A sum of ₹20 crore will be alloted to maintain the environment in the three places.

Mr. Kumaraswamy also focused on Ramanagara, which is his constituency, by exploring tourism potential and setting up arts and crafts village.


School reforms

The Chief Minister announced a package for repair of schools. He also announced starting English medium government schools.

About 48,000 schools will have biometrics within 3 years to monitor teachers and students. And 1,000 Government schools will have English medium sections.

Arounf 8,530 schools that have low enrollment will be merged with schools within a kilometre. Sports will be introduced as a subject in higher education classes.

A university for sports will be set up in Tumakuru and a Homeland Security University will come up in Shivamogga. A sum of ₹ 3 crore has been set aside for a tourism university at Hampi on PPP model.

Overall, the education department gets over ₹26,800 crore, a 11% increase from February budget.


About 16% of budget set aside for loan waiver

Mr. Kumaraswamy announced the formation of a farmers' consultation committee comprising of progressive farmers. A sum of ₹50 crore allocated for a zero budget natural farming on the lines of Andhra Pradesh.

The focus, he said, wouldl be on making farming productive and ensure good prices.

Total budget size is ₹2.13 lakh crore, of which ₹34,000 crore will be set aside for the loan waiver in the budget, he said.


The proposed farm loan waiver scheme is expected to tighten the State’s resources since the government had already effected a 30% hike in salary of its employees and pension, which has resulted in an additional expenditure of over ₹10,508 crore a year.

However, the robust growth in the State’s GST collections and timely compensation by the Centre would help the State to tide over the financial implications, sources said.



State Budget guided by coalition ‘dharma’

With this budget, the new alliance would be cemented by a common vision for economic development of Karnataka, sources in both the parties told  The Hindu .

The budget preparations were made based on the common minimum programme of the coalition partners. Besides the much talked waiver of farm loans, maternity benefit for women belonging to BPL families, measures for adoption of Israel method of farming, steps to boost animal husbandry and allied activities, creation more crore jobs, and universal health policy (popularly called Arogya  Karnataka)  were expected to find place in the budget.


0 / 0
Sign in to unlock member-only benefits!
  • Access 10 free stories every month
  • Save stories to read later
  • Access to comment on every story
  • Sign-up/manage your newsletter subscriptions with a single click
  • Get notified by email for early access to discounts & offers on our products
Sign in


Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.

We have migrated to a new commenting platform. If you are already a registered user of The Hindu and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.