Financial Daily from THE HINDU group of publications
Monday, Jan 28, 2002
Financial Daily from THE HINDU group of publications Monday, Jan 28, 2002 |
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Government
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Taxation `Karnataka coastal project may push up municipal taxes' Our Bureau
MANGALORE, Jan. 27 THERE will be a three-fold increase in water supply charges and municipal taxes if the Karnataka Government goes ahead with its coastal infrastructure and environment management project for which a large chunk of the funds have been raised in the form of a loan from the Asian Development Bank (ADB). Moreover, the project, which is to cover 10 towns in coastal Karnataka, costs 10 times more than the annual revenue of the local urban body of each town, according to a group of non- governmental organisations which have set out to question the rationale of raising funds with an ultimate tax burden of 13.5 per cent from the ADB and have tried to read the writing on the wall in places as geographically distinct as Bolivia and Coimbatore. The apprehensions of the NGOs concern a Rs 1,056.15-crore Karnataka Urban Development and Coastal Environment Management project which is to be partly funded by a Rs 735-crore loan from ADB. The State Government is to contribute Rs 271.07 crore and the local bodies of the ten `urban centres' will contribute a total of Rs 50.08 crore. The ten `urban centres' to be covered in the three coastal districts of Karnataka — Dakshina Kannada, Udupi and Uttara Kannada — are Ankola, Bhatkal, Dandeli, Karwar, Kundapura, Mangalore, Puttur, Sirsi, Udupi and Ullal. In the same breath, however, the NGOs also state that `borrowed funds' are necessary for the development of infrastructure, but the money, according to them, could be borrowed from other sources at a more reasonable rate of interest. The consistent depreciation of the rupee vis-a-vis the dollar, the NGOs point out, would also ultimately make holes in the pockets of the citizens on whose behalf the loan would have to be repaid for a period of twenty years. The Bolivian experiment with privatisation of water supply which led to riots and the present crisis in Argentina, according to the NGOs, should act as some kind of deterrent for the proponents of foreign-funded progress. With the Government already paying 69 per cent of its revenue income as interest on loans, and with this year's loan liability likely to be in the range of Rs 1,10,000 crore according to the Finance Ministry - a Rs 11,800 on each individual — the per capita loan burden on the citizens of coastal Karnataka would be in the range of Rs 4,500, with all taxes set to increase drastically.
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