Bouyant economy helps Karnataka CM present revenue surplus budget with outlay of ₹3 lakh crore

Collection targets for all taxes — Commercial Tax, Motor Vehicle tax, Stamps and Registration and Excise — except for Mines and Geology Department, have been breached in 2022-23

Aided by a buoyant economy, Karnataka Chief Minister Basavaraj Bommai presented a ‘please-all’ revenue surplus budget with no tax hike on February 17, less than 100 days ahead of Assembly elections in the State. The budget outlay has, for the first time, crossed the ₹3 lakh crore mark, and is pegged at ₹3,09,182 crore, up from ₹2,65,720 lakh crore in 2022-23. 

Fiscal deficit has been reined in at ₹60,581 crore, or 2.60% of Gross State Domestic Product (GSDP). With borrowings of ₹77,750 crore, the liabilities at the end of 2023-24 are pegged at ₹5,64,896 lakh crore, or 24.20% of GSDP, thereby satisfying all parameters of Karnataka Fiscal Responsibility Act, 2002.

The budget has proposed a revenue surplus of ₹402 crore, breaking the trend of revenue deficit budgets for the past two years, when the budgets did not comply with the Karnataka Fiscal Responsibility Act, 2002. 

Karnataka’s GSDP recorded a growth of 7.9% in 2022-23, as per advance estimates of Directorate of Economics and Statistics, Mr. Bommai informed the legislature during his budget speech. The GSDP growth is mainly fuelled by services and manufacturing sectors, which have grown at a pace of 9.2% and 5.1%, respectively.

“Despite erratic weather conditions, the agriculture sector has seen a growth of 5.5%,” Mr. Bommai said. The resurgence of the economy in 2022-23 has pushed the per capita income of the State from ₹2.04 lakh to ₹3.32 lakh. 

“In view of increase in demand along with growth in the economy, the growth in annual GST collection is 26% compared to 2021-22,” Mr. Bommai said. The state’s own tax collections were up by 21% up to January 2023, compared to 2021-22. Collection targets for all taxes — Commercial Tax, Motor Vehicle tax, Stamps and Registration and Excise — except for Mines and Geology Department, have been breached in 2022-23. 

Under the revised estimates for 2022-23, the budget outlay has swelled to ₹2,89,653 crore from a budget estimate of ₹2,65,720 crore, an increase of 9%. This has helped the State government curb fiscal deficit for 2022-23 by ₹8,703 crore, reducing it from an estimated ₹61,564 crore to ₹52,861 crore.