No new taxes in Karnataka budget

Chief Minister B S Yediyurappa, along with ministers arrive at Vidhana Soudha to announce the state Budget 2021 in Legislative Assembly in Bengaluru.   | Photo Credit: MURALI KUMAR K

The State Budget for 2021-22, presented by Chief Minister B.S. Yediyurappa amidst pandemic-linked economic slowdown, has not levied fresh taxes or increased existing ones despite shortfall in revenue. It was a please-all Budget that spread out allocations and projects for all communities, districts, and sectors.

It announced some incremental steps for developing health facilities and infrastructure, in the light of the pandemic. Presented on International Women’s Day, it focused on encouraging self-reliance and entrepreneurship among women through various programmes, both in rural and urban areas.

Balancing act

During the two-hour-long speech on the Budget in the Legislative Assembly --- which was boycotted by the Congress --- Mr. Yediyurappa admitted that “in the midst of the pandemic maintaining a balance between fiscal discipline and equity in development has given the experience of walking on a razor’s edge”. He said the Budget had been formulated “in such a way as not to increase the financial burden on the common man”.

COVID-19 had not only hit the State’s economy in 2020-21, but would continue to pose challenges in 2021-22 as well. “The 14% expected growth year on year in revenue will not be there during the next year. The responsibilities taken to manage the pandemic will have its own consequences in 2021-22,” the Chief Minister said.

Mr. Yediyurappa, who termed the preparation of the 2021-22 budget “unprecedentedly difficult”, presented a revenue deficit Budget, for the first time in recent years. The revenue deficit is estimated at ₹15,133.60 crore for 2021-22. The share of the State in Central taxes has come down by over ₹8,000 crore in 2020-21, receiving ₹20,053 crore against the estimated ₹28,591 crore.

Despite floods and the pandemic, the agricultural sector brought cheers to the State by recording a remarkable growth of 6.4% in 2020-21. Industrial and service sectors contracted by 5.1% and 3.1%, respectively.

The size of the Budget is fixed at ₹2,46,207 crore, an increase of ₹8,314 crore (3.5%) over the previous year’s (2020-21), including revenue expenditure (₹1,87,405 crore), capital expenditure (₹44,237 crore) and debt repayment (₹14,565 crore). It has proposed to borrow ₹ 71,332 crore (4% of GSDP).

Fiscal responsibility

With the fiscal deficit estimated at ₹59,240 crore (3.48% of GSDP) and total liabilities at ₹4,57,899 crore (26.9% of GSDP) in 2021-22, the government has proposed amendments to the Karnataka Fiscal Responsibility Act, 2002, in the current Assembly session.

Among the highlights, to please communities, the Budget proposed to rename the Ashrama schools of STs as “Valmiki Ashrama Shale”, earmarked ₹500 crore each to various development boards/corporations, Veerashaiva-Lingayat, and Vokkaliga communities. While ₹50 crore was allocated for Brahmin Development Board, ₹200 crore was earmarked for Christians, and ₹10 crore for construction of the Yatri Nivas at Ayodhya for the benefit of pilgrims visiting Ram Mandir which is under construction.

Region-wise, ₹1,500 crore has been allocated for the Kalyana Karnataka, ₹3,000 crore for development of backward taluks, and ₹7,795 crore for development of Bengaluru city. Under the Atma Nirbhar Bharat, it has proposed a new aerospace and defence policy.

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Printable version | Apr 23, 2021 10:33:24 AM | https://www.thehindu.com/news/national/karnataka/no-new-taxes-in-karnataka-budget/article34022319.ece

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