Karnataka’s budgetary allocation may have to undergo a major rejig to implement the poll promises made by the Congress and the Janata Dal (Secular), if either of them come to power after the May 10 Assembly elections.
With Karnataka’s revenue surplus Budget considered to be a “notional revenue surplus Budget”, implementing the schemes that are primarily revenue expenditure could result in revenue deficit, say those in the know. Similar schemes in neighbouring Telangana, Andhra Pradesh, and partially Tamil Nadu are being run through borrowings, sources in the government pointed out.
What it will cost
The initial estimate for the five “guarantees” announced by the Congress is expected to cost over ₹50,000 crore, and the 12 announcements of JD(S) is expected to cost the exchequer about ₹75,000 crore. While the Congress has said that these schemes are possible with better tax collection and rationalisation of expenditure, JD(S) sources said the schemes will be implemented through many State and Central government schemes along with improvement in tax collection.
The State Budget size for 2023-2024 presented by the BJP has been estimated to be ₹3.09 crore of which 26% comes through borrowings. Just about 18% of the total Budget has been earmarked for capital expenditure, and committed expenditure is high. In the committed expenditure, 22% is estimated to go for salaries and pension, it is going to go up substantially with the recommendations of the 7th Pay Commission expected to be implemented this year. The subsidy bill is about 11% -13%. This goes towards power, food, and various other welfare schemes in the State that is estimated to be between ₹35,000 crore and ₹40,000 crore. About 9% or about ₹25,000 crore will be towards debt servicing.
With little room to manoeuvre, experts believe that the options before the government are limited - either increase revenue through higher taxation or curtail expenditure on existing schemes or fund the new promises through borrowings. Present government borrowings are at the rate between 7.5% and 8%.
Still possible
However, though the size of new announcements is big, officials believe that space could be made to accommodate some of them through rationalisation of existing schemes that could bring down financial requirements.
“A lot of schemes are getting duplicated and these could be integrated. Many schemes have been announced as top-ups to existing State or Central government schemes. A lot of small schemes are being implemented by different departments which could be integrated and brought under an umbrella scheme,” said government sources.
For example, the Raitha Vidyanadhi Scheme now has programmes added to it, which brings beneficiaries who are already getting support through other schemes. In this Budget, Chief Minister Basavaraj Bommai announced free education to PU and degree students, which means top up support is redundant. In the agriculture sector, former Chief Minister B.S. Yediyurappa added ₹4,000 annually as a top-up for Prime Minister Kisan Samman Yojane. In areas where irrigation capacity has been created, borewells are being approved under Ganga Kalyan Yojane.
However, going by the legacy in Karnataka politics, sources indicated that certain “hard decisions” have to be made if the big ticket announcements are to be implemented. People aware of these schemes say historically across the political spectrum, governments have tried to keep the old schemes alive while trying to implement their major announcements. “Governments have also tried to implement all or most of their major announcements which meant thin resources being spread across many schemes. Unlike in the subsidy schemes where money is reimbursed at a later date, the DBT schemes require liquid cash for immediate transfers,” said a scheme. Also, the new trend has been to announce new schemes outside the Budget on special occasions/days.
This in contrast to the Central governments that have looked at merging schemes or dividing schemes or replacing schemes, sources pointed out. For example the Jawahar Rozgar Yojane (JRY) morphed into Swarna Jayanti JRY, which later became NREGA. In the education sector, schemes changed from Operation Black Board, into District Primary Education Programme then into Sarva Shiksha Abhiyan and now Samagra Shiksha Abhiyan.
“The big question is whether the next government will take certain hard decisions. The financial requirement will also depend on whether the government wants to implement them all at one go or in phases,” said a source.
