Yeddyurappa Presents a Please-all, Pre-poll Budget
Deccan Herald
Bangalore, Feb 21: In an election year, electoral gains precede financial discipline. And, Chief Minister B S Yeddyurappa on Friday proved that he was more a politician than the states finance manager while presenting the budget proposals for 2009-10.
In a recession-hit year, Yeddyurappa, who also holds the finance portfolio, presented the budget which has a deficit of Rs 43.08 crore, but hoped to collect an additional revenue of Rs 1,149 crore in 2009-10. He intended to increase the plan size to Rs 29,500 crore, up by Rs 3,548 crore compared with 2008-09.
At the same time, he revealed that the revenue collection from the State’s own resources for the current fiscal had failed to reach the target by Rs 3,111 crore.
In addition, the projected shortfall in the Central taxes will be Rs 830 crore, while the grant from the Centre dipped by Rs 454.89 crore. This takes the total shortfall to Rs 4,395 crore. The government also increased its market borrowings by Rs 4,645 crore against the estimated Rs 3,199.66 crore for the current fiscal.
The budget estimate for the coming fiscal is projected at Rs 58,031 crore which will be up by Rs 2,718 crore compared with this year.
The chief minister is probably assuming that the economy will bounce back in the coming months, and that the Centre’s assistance to the State will increase in proportion to the demand he has placed. He is also expecting a Rs 6,565 crore from the excise department in the next fiscal, though this year the department fell short of its Rs 52-crore target.
Coming to the positive side of the proposals, Yeddyurappa recognised the need for boosting the farm sector, which has seen declining production in recent years. He announced that farmers could avail of loan even from commercial banks at 3 per cent interest and provided Rs 250 crore towards subsidy in this regard. Now, the farmers are getting loans at 3 per cent only from co-operative institutions. Ironically, however, the allocation for agriculture and allied services has dipped to Rs 2,122 crore, a negative growth of 1.69 per cent compared with 2008-10.
No stimulus package
The chief minister did not announce any stimulus package to revive the economy. However, he desisted from going in for significant upward tax revision under any head. To give a breather to the real estate market, Yeddyurappa intended to reduce stamp duty from 7.5 per cent to 6 per cent. Besides, he met the demand of the housing sector by introducing the much-needed reforms like introducing slab system for collection of stamp duty on property lease.
In case of commercial taxes, which witnessed a negative growth of Rs 1,749 crore as compared with the estimate, the chief minister continued exemption of VAT on paddy, rice, wheat and pulses for one more year.
In order to encourage travel and spending, he slashed luxury tax on hotel room rents, besides entertainment tax on cinema tickets.
But outside Bangalore, the budget earmarked Rs 100 crore for construction of airports in Gulbarga, Bijapur, Shimoga, Hubli, Bellary and Mysore cities. Yet, there was no mention of proposed airports in Hassan, Bidar, Karwar and Mangalore.
Though the budget talked about developing ring roads in 10 important cities and towns, no allocation was made for this purpose.
Special grants
Chief Minister Yeddyurappa has promised to provide a special grant of Rs 50 crore to each of eight city corporations, Rs 15 crore to each district headquarters having CMCs, Rs 5 crore to taluk headquarters having TMCs and Rs 2 crore for small towns having TPs for their overall development.
All these cities and towns will be developed through Karnataka Urban Infrastructure Development Finance Corporation.
Ports
The budget has proposed to set up Karnataka Maritime Board for development of ports. A sum of Rs 100 crore is earmarked for construction of good ports at Karwar, Tadadi, Honnavar, Malpe and old Mangalore through private partnership. Besides, an allocation of Rs 10 crore has been made to provide for dredging of Karwar port to enable increased movement of ships.