The announcement of a 34,000-crore loan waiver for farmers, a poll promise of the JD(S) and the Congress, was perhaps the highlight of the 100-day HD Kumaraswamy government in Karnataka.
The measure was announced during the government’s first Budget in July, weeks after the government was formed in May.
That aside, the Kumaraswamy government has been battling one crisis after another.
The first among them was the separate statehood demand for North Karnataka, a controversy that could have been avoided had the Chief Minister been more prudent with his speech. Instead of an immediate apology, which could have doused the fire, the JD(S) was seen explaining itself, and the Congress was left squirming.
The Cabinet expansion exercise also invited bad press, as certain key leaders from North Karnataka were left out. There were revolts, and agitations by supporters which kept tugging at the tenuous link between the JD(S) and the Congress.
Much like Congress chief ministers before him, Kumaraswamy, too, had to rush to the Grand Old Party’s high-command in Delhi before each major decision was taken. While this might appear comical, it shows that the formation of the coalition government, with a JD(S) leader at the helm, came with several riders. Kumaraswamy also acknowledged it at a public event to felicitate him on his appointment as Chief Minister. “While you may be happy thinking your brother has become the Chief Minister, let me tell you that I’m not. I’m swallowing my pain, which is nothing more than poison, without sharing it. I’m not happy with the situation.”
Kumaraswamy’s predecessor, Congress leader Siddaramaraiah, wasn’t keeping to himself either. He kept writing several letters to the government seeking reversal of certain budgetary provisions.
While the results of the urban local bodies show the popularity of the Congress-JD(S) formation is intact, it will in no way influence the results of the Lok Sabha elections next year, as the equations played out there will be quite different.
Kumaraswamy has had his ups and downs so far, but the voters will be watching how he negotiates the period leading up to the general elections.
His loan waiver announcement has been met with much scepticism. The numbers don’t really add up. The fiscal deficit has only increased. During the Siddaramaiah government’s tenure, the fiscal deficit was 2.6 per cent of the Gross State Domestic Product (GSDP). As per the latest estimate, and after the loan waiver, it could go up to 2.9 per cent; in value terms, it will be about ₹40,750 crore, an increase of ₹7,250 crore from the previous estimate of ₹33,500 crore. As the State is bound by the Karnataka Fiscal Responsibility Act, 2002, the fiscal target has to be under 3 per cent of the GSDP. The government has been prudent enough to spread the loan waiver over the next four years as the revenue surplus has to be maintained at 1 per cent of the GSDP.
Cutbacks on the anvil
However, the fiscal deficit is almost certain to breach the 3 per cent mark in the next few years because the government has to begin investing more on welfare measures over the next few years if it wants to remain popular.
The government hopes to make up for the deficit through hikes in excise duties on liquor and fuel, and through cutbacks on several other welfare measures. It has reduced expenditure on animal husbandry, medium irrigation projects, fisheries, storage and warehouse. There has been a decreased allocation of at least 61 per cent in medium irrigation projects, something which should be a cause for concern as these investments will have to return at some point in time. “By doing these things, you are increasing long-term risks. The money has to come from somewhere,” says Kshitija Joshi, an economist at the National Institute of Advanced Studies.
When the coalition partners chose Kumaraswamy to head the government, he was seen as a more acceptable leader among the lot but the tag may not long last if the chief minister does not show results soon. The BJP is keeping a watch on the developments from the sidelines and so are the ever-increasing number of rebels.