With Assembly elections due next year, Karnataka Chief Minister Siddaramaiah announced a slew of populist schemes, including setting up of food canteens for the poor and laptops for students, in the Budget he presented today.

Airports in tier-2 cities and opening of six medical colleges were also proposed. Siddaramaiah, who holds the finance portfolio, presented a ₹372-crore deficit Budget.

VAT-free liquors

While several states are toying with the idea of prohibition, Siddaramaiah surprised the industry by abolishing value added tax (VAT) on beer, feni, liqueur and wine with effect from April 1. To make up for the revenue loss, Indian Made Liquor (IML) prices have been increased with additional excise duty (AED) on two slabs at 6 per cent and 10 to 16 per cent on the rest of the slabs.

The Budget proposes to enhance the tax on luxury two-wheelers costing more than ₹1 lakh from 12 per cent to 18 per cent. This is likely to fetch an additional revenue of ₹60 crore. The Chief Minister said that in the light of the introduction of GST, “I do not propose to make any major changes in the rate structure. I propose to continue the tax exemption for paddy, rice, wheat, pulses and products of rice, ragi-rice (processed ragi) and wheat. I also propose to exempt flour of Navane, Same, Aaraka and Baragu (Siridhanyagalu) from tax. I also propose to exempt tax on husk of coconut and pulses.”

Revenue & expenditure

The Chief Minister said the total receipts of the state are estimated to be ₹1,82,119 crore during 2017-18. The Budget estimates envisage revenue receipts of ₹1,44,892 crore and capital receipts of ₹37,227 crore, including borrowings of ₹37,092 crore.

The total expenditure is estimated to be ₹1,86,561 crore consisting of revenue expenditure of ₹1,44,755 crore, capital expenditure of ₹33,630 crore and debt repayment of ₹8,176 crore.

Revenue surplus of the state is estimated to be ₹137 crore. Fiscal deficit is expected to be ₹33,359 crore, which is 2.61 per cent of GSDP. Total liabilities is at ₹2,42,420 crore at the end of 2017-18. This is estimated to be 18.93 per cent of GSDP. This is within the limit of 25 per cent for 2017-18 mandated in the Karnataka Fiscal Responsibility Act.

Talking about resource mobilisation, the Chief Minister said the State’s Own Tax Revenue for 2017-18 is estimated to be ₹89,957 crore, which is an increase of 9.42 per cent over the revised estimate of 2016-17. An amount of ₹6,945 crore is expected to be collected from non-tax revenues.

Central tax share

The state government expects to receive ₹31,908 crore by way of the share in Central taxes in the Budget 2017-18 and another ₹16,082 crore as grants from the Centre. These revenue receipts are estimated to be supplemented by gross borrowings of ₹37,092 crore, non-debt capital receipts of ₹75 crore and recovery of loans to the extent of ₹60 crore.

Various state-owned boards and corporations and local bodies are expected to mobilise ₹11,279 crore through internal resource generation and borrowings made on the basis of their own financial strength and own revenues.

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Published on March 15, 2017