Karnataka Chief Minister H D Kumaraswamy performed a balancing act in the maiden budget of the coalition government on Thursday by unveiling a farm loan waiver as promised by the JDS ahead of the state polls while continuing with all policies proposed by the previous Siddaramaiah-led Congress government in the budget presented in February.
Kumaraswamy announced a Rs 34,000 crore farm loan waiver scheme for 17.32 lakh farmers, who took loans up to Rs 2 lakh and defaulted on payments till December 31, 2017. Pending farm loans up to Rs 2 lakh will be waived off by all banks on the basis of a guarantee by the government through a bond to enable banks to issue clearance certificates to farmers to avail new crop loans, said economic advisor S Subramanya.
The state government this year will compensate banks to the tune of Rs 10,500 crore for the loan waiver and will generate funds for the payment mostly through an increase in taxes on fuel, electricity, motor vehicles and alcohol, announced in the 2018-19 budget.
In the second phase of the scheme, the coalition government has also proposed an incentive of Rs 25,000 each for 27.67 lakh farmers who have repaid their loans on time “to prevent complaints that only defaulters have benefited”, Kumaraswamy said. The loan waiver will be restricted to small farmers.
The budget involves an increase in state borrowing to the tune of over Rs 10,000 crore over the nearly Rs 35,000 crore borrowed for the 2017-18 fiscal period. “All of the programmes from the February 2018 budget of the Congress under Siddaramaiah are being carried forward and that is why there is no mention of schemes for various groups like minorities. We are carrying forward the Rs 2.09 lakh crore budget presented in February and have only increased the outlay by Rs 9,000 crore to Rs 2.18 lakh crore,’’ Kumaraswamy stated.
Populist schemes like the distribution of free rice under the Anna Bhagya programme launched by the Siddaramaiah government will be expanded to provide 500 gm of tur dal, and 1 kg palm oil, salt and sugar at subsidised rates, Kumaraswamy said.
The JDS-Congress coalition has announced an increase in taxes on petrol and diesel by Rs 1.14 and Rs 1.12 per litre, excise tax on liquor by 4 per cent and an increase in motor vehicle taxes. The duty on electricity consumption has been increased from 6 per cent to 9 per cent for all consumers. The new tax measures are expected to increase state tax revenues by around Rs 14,900 crore.
“Revenue surplus is estimated to be Rs 106 crore. Fiscal deficit is expected to be Rs 40,753 crore which is 2.89 per cent of the GSDP. Total liabilities at Rs 2,92,220 crore at the end of 2018-19 are estimated to be 20.75 per cent of GSDP. This is within the limit of 25 per cent for 2018-19 mandated in the Karnataka Fiscal Responsibility Act,” Kumaraswamy said.
Despite promising an allowance of Rs 6,000 for pregnant women in his manifesto, Kumaraswamy scaled down the allowance to Rs 1,000 per month and stated that the amount will be increased in a phased manner over the next five years.
Kumaraswamy also announced an increase in the monthly pension for senior citizens from Rs 600 to Rs 1,000 costing Rs 660 crore this year. The JDS manifesto had promised Rs 6,000 as pension for senior citizens above the age of 65.
The budget has a slew of schemes for southern Karnataka districts like Hassan, Ramanagara and Mandya and a new multi-speciality hospital, a medical college and a film university has been proposed for Kumaraswamy’s Ramanagaram constituency on the outskirts of Bengaluru.
To create employment, Kumaraswamy has proposed a “Compete with China” scheme where industrial production capacity will be nurtured in seven areas in eight regions entailing a Rs 14,000 crore investment by the state over the next few years. The scheme is expected to generate 8 lakh jobs at the rate of 1 lakh per district, Kumaraswamy said.
“This is the first budget of our coalition government. The stand of the coalition government, its dreams and realities, difficulties and challenges are reflected,” the Chief Minister said in his budget speech.