The 14th Budget presented by Karnataka Chief Minister Siddaramaiah (his seventh as CM) over nearly three hours in the state Assembly on Friday was as much a political speech embedded with the values of socialism, secularism, and equity in society as it was about the Budget numbers.
Coming at a time when Karnataka’s finances are at the crossroads — revenues are high but the pressure to ease the lives of the nearly four crore (of the nearly six crore) population who live in poverty is the top priority for the new Congress government — Siddaramaiah’s 2023-’24 Budget banks heavily on stringent and tighter collection of state taxes — excise, property, and motor vehicles — to cover for the nearly Rs 52,000 crore outflow for five populist schemes that helped the Congress win the Assembly polls in May.
Much of the messaging in Siddaramaiah’s Budget was directed at the electorate from the marginalised groups that delivered the Congress the electoral victory. There was also strong criticism of the BJP’s political and economic policies — from polarisation to pumping of state resources into the creation of public infrastructure and hoping that wealth will trickle down to the bottom rather than the Congress policy of putting money in the hands of the masses and hoping that new purchasing power will boost consumption at the bottom of the pyramid.
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“I am a firm believer in social justice and democratic values. Our government will follow the path of socialist, secular, and democratic values enshrined in our Constitution. At this juncture, I wish to reiterate our commitment to restore people’s faith in social justice, liberty, equality and fraternity,” the Karnataka CM said at the start of his Budget speech.
To compensate for the nearly Rs 52,000-crore expenditure on schemes to facilitate free bus travel for women (Shakti), free power up to 200 units for all households (Griha Jyothi), a monthly allowance of Rs 2,000 for women heads of households (Griha Lakshmi), a Rs 3000 allowance for unemployed graduates (Yuva Nidhi), and a five kg free rice scheme, the Congress government hiked taxes on hard liquor by 20%, beer by 10%, and will revise guidance values for properties to increase registration taxes.
“By implementing all five guarantee schemes, about Rs 52,062 crore will be disbursed to nearly 1.3 crore families in a year. Hence, each family will get Rs 4,000 to Rs 5,000 per month assistance every month which is an average of Rs 48,000 to Rs 60,000 annually,” Siddaramaiah said on Friday.
The implementation of the guarantees demonstrates for the first time the deployment of an Universal Basic Income — a scheme talked about by the Congress — in the country, the CM claimed.
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The Congress guarantees “are not just freebies provided to the people but are necessities to distribute the fruits of economic development among the poor and the depressed”, Siddaramaiah said.
The CM underlined his political and economic philosophy by saying that “when the belief that fruits of economic development shall pass into the hands of the poor easily (trickle-down theory) is belied, cash transfer to poor and especially to women with no strings attached has proven to be an effective way to empower women and increase their purchasing power”.
Siddaramaiah insisted that improved revenue-generation measures would ensure that the state’s economy was not left in the lurch down the line.
“Revenue-mobilisation measures will be undertaken to strengthen the state’s financial position. Tax departments will be strengthened to increase tax compliance and steps will be taken to tackle tax evasion and leakage. Since there is a need for additional resources, tax departments are being entrusted with higher targets,” the CM said of his plans on keeping the state economy in the green.
The Budget estimates total revenue receipts in 2023-’24 to be Rs 2.38 lakh crore, which is an increase of Rs 48,522 crore (26%) compared to the 2022-’23 revenue receipts. The state is looking to borrow an additional Rs 13,979 crore (19%) over the Rs 72,090 crore borrowed last year.
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“The revenue deficit for 2023-’24 is estimated at Rs 12,523 crore. Fiscal deficit is estimated at Rs 66,646 crore, which is 2.6% of GSDP and the total outstanding liabilities of the state is estimated to reach Rs 5,71,665 crore at the end of 2023-’24, which is 22.3% of the GSDP. As per the Karnataka Fiscal Responsibility Act, 2002, fiscal deficit has to be within 3% of GSDP and total outstanding liabilities to be within 25% of GSDP. This Budget has fulfilled both the criteria,” Siddaramaiah said.
“Justice is not discrimination or polarisation or creating divisions in society. Justice is fairness, justice is empathy and justice is to eliminate economic inequalities by providing greater opportunities for those who are deprived,” he said.
On the last five years, the CM added, “Yes, the state was reeling in darkness and injustice. On the one hand crony capitalists thrived, while on the other the common people suffered untold miseries. While the deadly pandemic was after our lives, maladministration and corruption cost common people much more.”
The CM accused the previous BJP government of squeezing the state’s vital resources by locking up funds in dozens of infrastructure projects that were initiated in the final months of tenure.
“As of the end of 2022-’23, a total of Rs 2,55,102 crore worth works are pending and it requires nearly six years to complete these projects. The huge balance cost of works left over by the previous government has posed a major challenge to our government in taking up new projects,” Siddaramaiah said.
Incidentally, the CM did not announce any big-ticket infrastructure projects. Much of its own allocations are tied up in the five guarantees the Congress gave to voters. The share of allocation for education and health in the Siddaramaiah Budget remains on par with the share of the total Budget in the final year of the Bommai tenure at 11 and 5% respectively.
“The debt repayment liabilities of the state were 9.5% of the revenue receipts in 2017-’18, which has increased to 15.06% of the revenue receipts in 2023-’24, due to fiscal indiscipline of the BJP,” he said.
Siddaramaiah also accused the BJP government at the Centre of meting out step-motherly treatment to Karnataka despite the presence of a BJP government in the state by not releasing GST compensation and other state dues.
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“Though the Union Finance Minister has been elected from our state and despite the claims of a double engine government, the previous government failed in getting grants from the Centre,” he said.
Former CM and Janata Dal (Secular) leader H D Kumaraswamy said the Budget was “restricted to political statements”. “This is a Budget that will be remembered only for being a record Budget for the state finance minister (Siddaramaiah). It is more a condemnation of the BJP than a Budget. At many places the Budget speech is about injustice by the BJP at the Centre,” he said.
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The BJP, which does not yet have a Leader of Opposition in the Assembly, was forced to react through party president Nalin Kateel, who said the Budget lacks ideas for development, and BJP national general secretary C T Ravi, who said the Budget would “cause hardship to the middle class”.
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