Striking balance in times of unstable politics

This budget comes at a time when the political atmosphere in the state is heavily charged, and though simmering since the formation of the Kumaraswamy government, it reached near boiling point last week.  General elections are approaching and under these conditions, the budget is being presented with three strong constraints. First, dealing with unfulfilled promises made in the 2018 budget, especially farm loan waiver, 200MLD Cauvery water to Mysuru villages, creation of 8 lakh jobs, a sports equipment project at Tumkuru creating 1 lakh jobs, and the 65km Outer Periphery Road for Bengaluru.

Second, the state’s finances are not in great shape, and after fulfilling the loan waiver promise, may take a further beating. Besides, the CM has promised a growth rate of 9.6%, with agriculture growing at 4.8%. The size of the budget is kept at Rs 2,34,153 crore, possibly only on the back of estimated receipts from the central govt to the tune of Rs  36,215 crore, Rs 8,181 non-tax revenues, Rs 20,950 crore from excise, Rs 11,828 crore from stamps and registration and Rs 7,100 crore from the transport sector. Added to that are borrowings of 20.75% of GSDP, keeping below the mandated threshold of the Karnataka Fiscal Responsibility Act.

Third, there is little to be expected from revenue, as the last budget used the increase of petrol and diesel taxes and excise on liquor. Besides, political promises have to be kept to ward off instability. This time too, the CM depended more on excise, stamp duties and transport, leaving other sources of revenue untouched.
On the expenditure side, he has allocated Rs 46,853 crore for the agriculture sector, followed by Rs  30,445 crore for social welfare. Allocations in agriculture, barring the loan waiver, are thinly spread across various components like zero-budget farming, organic farming, entrepreneurship (Rs 2 crore), Israeli model (Rs 145 crore) but which was tried in other states and abandoned. Horticulture is bunched with fisheries, sericulture and animal husbandry. No systematic thinking has gone into a development model for the next five years, and almost every aspect that seemed necessary has been allocated some money. There is a new promise of 10 lakh jobs, when last year’s promise remains a dream.

R S Deshpande
Visiting professor, ISEC, Nanjundappa Chair, and professor, CMDR ICSSR National Fellow