Chidambaram presents budget for Karnataka under prez rule

Union Finance Minister P Chidambaram on Monday presented a revenue surplus budget for Karnataka for the first six months of 2008-09 in Lok Sabha, the lower parliamentary house of the country. Karnataka has no state government since November 20, 2007, so the current administrative power is in Central government’s hand and the Central government has to take all the administrative decision.

Presenting the Karnataka Budget before the Lok Sabha Members on March 10, 2008 Chidambaram has proposed no new tax, no announcement of new schemes and no big deal in the presented budget proposal. However, he has announced to continue the running project in this session and has also declared to provide the necessary allocation for the running projects.

The tenure of the budget will be end maximum by September 2008 until Karnataka finds a new state government.

Finance Minister Chidambaram has presented a total outlay of Rs.56,542 crore for 2008-09 as against the budget outlay of Rs. 50,466 crore, 12% higher outlay for the current fiscal while the plan outlay for 2008-09 has been projected to Rs. 21,175 crore, 22% more that last year’s plan outlay of Rs. 17783 crore. All the outlay has been made from the State’s Consolidated Fund.

This budget will get the surplus revenue of 2,972.65 crore because the earning revenue from several tax collections will be higher from the presented budget expenditure. Chidambaram has estimated to achieve the revenue receipts of Rs 46,188.70 crore, while revenue expenditure is estimated at Rs 43,216.05 crore. While Karnataka will get this year a Central government’s grant of Rs. 12,811.12 crore besides earning revenue.

This is the first time since 2004-05, when state has got a revenue plus budget.

On the capital account, Chidambaram is estimated to receipts the sum of Rs 9,273.45 crore while the expenditure is about to rise up to Rs 13,326.09 crore for the state. This budget is expected to continue the growth rate of 9 % in the next fiscal while inflation will likely to be near 4 % during the same period.

The fiscal deficit for the 2008-09 will be under 3% of the Gross State Domestic Product (GSDP) of Rs. 2,44,043 crore. Karnataka has continuously maintained the fiscal deficit below 3% since Rs.2004-05, as per FM Chidambaram cited.

P Chidamabaram has also presented the supplementary demands for grants for the State for 2007-08.

In the presented budget, FM has primarily paid attention to promote the education, health and social welfare sectors. Besides this, he has also enhanced the government allocation in water supply and sanitary aspects as well as the welfare of Scheduled Castes and Scheduled Tribes and other backward classes.

“The budget seeks to promote the development of human capital in the state by enhanced investments in education, health and social welfare,” said Chidambaram while presenting the budget.

“Karnataka will continue to receive the benefits of debt consolidation and waiver of central loans amounting to about Rs.6.5 billion per year while It also seeks to initiate special steps to improve the productivity of the farm sector and the economic condition of farmers”, added Chidambaram.

This year, education sector would be able to expend only Rs.6,300 crore while the budget expenditure for 2007-08 was Rs. 6,540 crore. This is not entirely surprising; the revenue expenditures related to health has also show a similar decline.

However, the main features of the budget are: the interest loan on farmer’s debt (4%), mid-day meal scheme for schoolchildren and free bicycles for school-going girls to promote women's education.

Here is the highlight of the presented budget:

• The collection from State excise and tax on vehicles has increased by about Rs. 1,600 crore while stamp duty and commercial taxes have slid by almost Rs. 1,100 crore in the current fiscal.

• The agriculture, rural development, education, water supply and sanitation, housing, urban development, welfare of SCs, STs and OBCs and social security and welfare sectors will gain the higher allocation.

• Rs. 240 crores has been allocated for road maintenance in the state while all the major district roads will also be improved with an expenditure of Rs.300 crores.

• An allocation of Rs.50 million for the new Special Purpose Vehicle to provide high-speed rail link to the new Bangalore International Airport that has been established at Devanahalli, about 35 km from the city centre and it is likely to begin the commercial operation by March 30 this year.

• An additional budget allocates of Rs.1 billion for upgrading airports in Mangalore, Mysore, Hubli, Bijapur, Shimoga, Hassan, Gulbarga, Karwar, Bidar and Belgaum.

• An allocation of Rs.50 crore to construct a new state secretariat building in Belgaum touching Maharashtra.

• A special hike allocation of 58% (Rs.24,890 crore)for northern region of Karnataka to make a balance with the southern region.

The UPA government has appraised this budget while the opposition has quoted it only ‘election gimmick’ budget. The members of both the alliances were responding the budget after its tabling.