BENGALURU: Chief minister Basavaraj Bommai is said to be working on proposing a revenue-surplus budget for 2022-23 after two successive revenue-deficit ones. However, officials in the finance department say it’s going to be an uphill task given the burgeoning committed expenditure and limited revenue options.
Karnataka had been seeing revenue-surplus budgets since 2004-05, when then deputy CM and finance minister Siddaramaiah showed a surplus of Rs 150 crore. However, 2021-22 saw the government presenting a revenue deficit of Rs 15,134 crore, which is 0.89% of the Gross State Domestic Product, owing to the Covid-induced economic slowdown. The previous year’s budget had projected a revenue surplus of Rs 143 crore but was eventually revised to a deficit of Rs 19,486 crore.
Revenue deficit is the measure of difference between projected income and actual income the government generates. It means the government’s income is not enough to cover its basic operations and it must borrow or sell assets to fill the gap in payment of salaries and loan interest.
Bommai, who is known to be well-versed in public finance, is working to turn around the state’s economy by finding innovative means of mobilising resources as the government has only limited scope for hiking tax rates and cutting unwanted costs. “Wait and watch. You will find a budget with some innovation. It will be one you have never seen before,” said Bommai.
Good pace of recovery
The state is witnessing a good pace of recovery after the slowdown. All the revenue-earning departments have performed well and are expected to meet or surpass the target fixed in the budget for 2021-22.
The commercial taxes department has collected GST of Rs 66,000 crore till date, apart from the Rs 24,639 crore compensation that includes Rs 12,000 crore borrowing under special window and Rs 16,254 crore from sales of petrol and diesel. That means the government is expected to earn more through commercial taxes than the target of Rs 76,000 crore.
“The situation is buoyant in terms of tax collection and there is a fair chance of us surpassing the target by March 31,” said commercial taxes commissioner C Shikha. Officials expect revenue from commercial taxes to hit around Rs 90,000 crore.
The excise department has collected Rs 24,000 crore through liquor sales, as against the target of Rs 24,500 crore, and is expected to earn at least Rs 2,000 crore next month. Even the transport department’s performance has been good as it has mopped up Rs 5,289 crore in motor vehicle taxes, as opposed to the target of Rs 6,986 crore. The stamps and registration department has racked up about Rs 10,000 crore through property registration, against a target of Rs 12,655 crore.
“We can expect a revenue surplus, though it will be marginal, given the trends in revenue collection,” said economist M Govind Rao.
However, officials have a word of caution as the committed expenditure, which comprises salaries and interest payments, has exceeded 90% of the state’s own taxes, pegged at over Rs 1.2 lakh crore. “Unless we contain the committed expenditure, revenue-surplus budget will be wishful thinking,” an official said.
