Siddaramaiah presents Karnataka budget, with eye on assembly elections
Karnataka budget lists double-digit outlay for agriculture, social and backward classes welfare and water resources, higher excise duty and removal of VAT on liquor sales
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Bengaluru: With eyes clearly set on the assembly elections next year, Karnataka chief minister Siddaramaiah on Wednesday announced a budget that continued the “please all” pitch and appeasement policy with higher allocations to mass voter segments.
The Congress-led state government presented a Rs1.82 trillion budget for 2017-18, up 12.44% compared to around Rs1.62 trillion last year, with higher allocations to several sectors including agriculture, social and backward classes welfare and water resources among others.
“This is not an election budget. Our priorities are continued in this budget. We are committed to social justice and inclusive growth,” Siddaramaiah said while trying to dismiss the ‘pro-welfare-anti-development’ argument.
Analysts say that there is a clear eye on the polls as the Congress party’s efforts would be to retain the state-one of only six governed by the grand old party. His efforts to play one up over the Bharatiya Janata Party (BJP) was evident in the post-budget press conference as the chief minister made comparisons of allocations with the previous government whose term ended in 2013.
“His effective distribution of states’ earning to satisfy possibly every section of the society to reiterate the fact that Congress stands as a representative of all thus reassuring the sections of the society that congress firmly believes in an appeasement policy over firmly pegging the growth,” Harish Ramaswamy, political analyst and professor at the Karnataka university, Dharwad said.
However, Siddaramaiah did not heed to demands by opposition parties and farming communities that have demanded a loan waiver as the state is facing its second consecutive drought due to deficient rains.The Siddaramaiah led-Congress government in the state announced Rs5,080 crore for the agriculture department, up 16% from Rs4,344 crore last year. The government announced the extension of payments in long- and short-term loans to cooperative societies by one year in which an interest subsidy of Rs45 crore was paid by the government on behalf of 2 lakh farmers and extending the repayment of dues of agricultural loans.
Allocation for the social welfare department and backward classes welfare (combined) was up almost 20% to Rs9,517 crore from Rs7,967 crore last year. Food and civil supplies department allocation was Rs3,636 crore, up 73.47% from Rs2,096 crore last year.
Narendar Pani, political analyst and faculty at the National Institute of Advanced studies says that there is an election target but adds that the chief minister has focused on development outside Bengaluru as well. Pani says that Siddaramaiah has tried to introduce more revenue sources by removing value added tax (VAT) and putting in the additional excise duty element to insulate it from the soon to be implemented goods and services tax (GST).
The state has declared 17 slabs of additional excise duty and is increasing that duty by 6% on some slabs and by 10% and 16% on others. As a result, it is removing VAT on liquor—including beer, fenny, wine and liqueur—effective 1 April 2017.
“Additional excise duty is going to lead to approximately Rs20 a bottle increase in most of the segments in which we operate. The consumer price will go up Rs30. But it’s not that significant an increase that we have to worry about it. As far as the VAT is concerned, it was only applicable on sales in bars and pubs. So there will be some positive impact for the consumer there,” said Deepak Roy, executive vice chairman of Allied Blenders and Distillers Pvt. Ltd.
Indeed, with all the changes, Karnataka’s excise department has bumped up its revenue target for the next financial year by 9.32%. The department, which expects to meet its target of earning Rs16,510 crore in revenue for the financial year 2016-17, set itself a target of Rs18,050 crore for the next financial year.
Taking a leaf from late J.Jayalalitha’s subsidised ‘Amma Canteen’, Siddaramaiah also announced ‘Namma Canteens’ in all 198 wards of Bengaluru which would serve breakfast at Rs5 and lunch & dinner at Rs10/- will be provided.
Other significant allocations include over Rs18,127 crore to the urban development department-Bengaluru taking the lion’s share- with key infrastructure projects like Bangalore Metro, major road works and urban housing projects, among others.
However, the Information Technology, Biotechnology, Science & Technology department managed only Rs299 crore, slightly up from Rs222 crore last year.
Siddaramaiah also proposed to implement uniform admission fee policy in all cinema theatres, including multiplexes, by prescribing Rs200 as maximum admission fee.