Poll promises may require major rejig of budgetary allocation

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.

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.

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%.

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.