The Hindu Business Line : Karnataka waives crop loans up to Rs 25,000

Budget story
Power subsidies to continue
Motor vehicle taxes hiked to generate Rs 75 crore
VAT rates on software licenses reduced to 4 per cent from 12 per cent
Arrack sale abolished and estimated revenue loss estimated at over Rs 1900 crore.

HANDING ACCOUNTS: The Karnataka Chief Minister, Mr H.D. Kumaraswamy, and the Deputy Chief Minister, Mr B.S Yediyurappa, arriving at Vidhana Soudha to present the budget on Friday. — G R N Somashekar

Bangalore March 16 The Karnataka Government has continued with its farm focus and packaged Budget 2007-08 with a slew of loan waivers.

The Finance Minister, Mr B.S. Yediyurappa, abolished the sale of arrack in the Budget, forgoing an annual excise revenue of Rs 1,905 crore in the process.

The Government waived crop loans of up to Rs 25,000 taken by farmers between April and December 2006 in view of drought and floods.

This waiver would also apply to distressed fishermen in the State, he said, presenting the Budget for 2007-08.

In addition the State Government has continued with its regime of revenue subsidies to the electricity distribution sector, at Rs 1,800 crore for the next fiscal.

For farmers and fishermen who availed themselves short-term and long-term loans, the Government has proposed complete interest payment waivers if the outstanding principal is paid by March-end this year.

For farmers who have already repaid the crop loans, it is proposed to convert the amount into three-year fixed deposits yielding an interest of four per cent.

But the State Government hinted at mopping up non-tax resources for the year through revision of royalty rates on mining.

Similarly, the State Government indicated a revision of user charges on water.

Other than these proposals, the revenue mop-up estimates are confined to a revision in motor vehicle taxes to raise Rs 75 crore.

All additional revenue mop-ups are linked to greater tax compliance.

Despite being loaded with subsidies, the Budget still projects revenue surplus of Rs 1,626.66 crore for 2007-08.

The waivers and subsidies were made on the back of buoyant revenues and the resultant higher-than-estimated revenue surplus of Rs 2,831.54 crore for the current fiscal, against the estimated Rs 1,534.54 crore.

The revenue surplus estimated for the current fiscal was largely on account of improved tax receipts and higher than estimated central transfers.

Karnataka had estimated a revenue loss of Rs 1,580 crore on account of migration to the VAT regime.

But the actual loss suffered was only Rs 730 crore.

The Government has already received central support of Rs 390 according to agreed formula for compensating VAT losses.

The revised estimates of own tax collection was Rs 23,887.94 crore against the targeted Rs 22,533.79 crore.

What also contributed to buoyant revenues were the higher-than-estimated collections from excise and stamp duties (Rs 4,536 crore and Rs 3,331 crore).

Share in Central tax receipts for the current fiscal is projected at Rs 5,009.62 crore in the revised estimates against the budgeted Rs 4,608.90 crore.

During the same period, capital expenditure also overshot the budgeted estimates.

The revised estimates for 2006-07 show capital expenditure at Rs 8,019.44 crore against budgeted estimates of Rs 6,553.52 crore.

Revenue expenditure during the current fiscal also rose to Rs 35,164.26 crore against budgeted estimates of Rs 34,340 crore.

Yet, despite the increases in revenue expenditure, Karnataka appeared to have its fiscal consolidation targets on track.

Fiscal deficit for the current year was Rs 5,371.85 crore against the budgeted estimate of Rs 5,210.58 crore, but remained at 2.77 per cent of the gross state domestic product (GSDP).

For 2007-08 the Government has kept the fiscal deficit target at 2.87 per cent of the GSDP.

For the next fiscal, revenue receipts are estimated at Rs 26,691.17 crore.

Non-tax revenues are estimated at Rs 1,857.10 crore.

But in making these projections, a back of the envelope calculation indicates that the State is estimating nominal GSDP growth of 13 per cent and an inflation-adjusted growth of eight per cent.

More Stories on : Budget | Policy | Karnataka

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page