Govt to auction securities for funds

BENGALURU: The state government is exploring all possible avenues, including raising funds from the market, to overcome shortfall in revenue generation due to a dip in taxes and delay in getting the Goods & Services Tax (GST) component from the Central government.

Karnataka Government is mobilizing funds by offering to sell securities by way of auction.“This is one of the options before the state government to raise funds and governments have resorted to such options in the past too,” said economist Professor R S Deshpande.On Tuesday, auction to raise Rs 2,000 crore will be conducted on the Reserve Bank of India (RBI) core banking (E-Kuber) system.

K’taka’s expenditure out of control due to many social welfare schemes: Expert

Many products from the sector are sourced by the government. Experts suggested that the government should clear these bills to give boost to the sector, which will in turn pay taxes, pulling the government out of the financial morass.

Economist and professor R S Deshpande from the Institute for Social and Economic Change said that Karnataka’s expenditure is out of control because of many social welfare schemes. “Since dropping these schemes will be a difficult political decision, one has to look at avenues to increase revenues. With GST, the state has limitations in levying other new taxes, but it can look at increasing excise, entertainment, petrol and petroleum taxes, which come under the ambit of the state government.

However, the entertainment industry, which is strong, may lobby with the government not to increase taxes,” he said.“States depend on the central government to transfer a certain amount of money. But this time, Karnataka could not effectively present its case before the 15th Finance Commission which resulted in the state getting less than what it is legitimately entitled to. This will pose a problem for us over the next few years. One should realise that only the crying baby gets the milk. Our representation to the Finance Commission was very weak and as I was part of that delegation, it was clear that the people sitting across were not favourable to Karnataka. Also, we pleaded on certain aspects that were not under the purview of the commission,” he said.

Sources in the CMO said that Yediyurappa may not do away with any of the Bhagyas introduced by the previous governments headed by Siddaramaiah and H D Kumaraswamy, but will definitely cut allocations to them.