Despite Covid, Karnataka closer to revised revenue target | Bengaluru News – Times of India

BENGALURU: Chief minister BS Yediyurappa and his cabinet colleagues often cite the Covid-19 pandemic when there’s a demand for release of funds for development works or grants for any sector, giving the impression that the state’s economy is in bad shape.
However, tax collection for 2020-21 mentioned by Yediyurappa in the budget indicates otherwise. Data suggests the economy is not that badly affected by the pandemic. The state is inching towards achieving 100% of its revised tax revenue target for the current fiscal, besides receiving around 90% of its share from central taxes and grants.

Till February 28, the state has collected Rs 1.06 lakh crore and is expected to collect Rs 1.19 lakh crore by March-end against the revised target of Rs 1.17 lakh crore. The budget estimation was around Rs 1.28 lakh crore but owing to the lockdown which hampered economic activities for over three months, it was revised to Rs 1.17 lakh crore.
According to an official of the finance department, the state got around Rs 30,000 crore as its share of central taxes and grants against the budget estimates of Rs 34,198 crore.
Meanwhile, Karnataka has spent Rs 5,372 crore on pandemic management. This means it has an additional burden of around Rs 10,000 crore (including shortfall in central devolution and grants). Even if the original budget estimation (Rs 1.28 lakh crore) is taken into consideration, the shortfall would amount to around Rs 19,000 crore.
Meanwhile, the state has borrowed an additional Rs 17,500 crore which almost offsets the Rs 19,000 crore burden on the exchequer. It now appears the government has used the pandemic excuse to defer implementation of several budget proposals.
Experts feel growing revenue expenditure is the real culprit, not the pandemic.
“The stress on the exchequer is certainly not because of the pandemic. It could be a small reason. The real reason is growing revenue expenditure. Unless we stop unproductive expenditures like doling out funds to communities and castes, the stress will continue,” said RS Deshpande, former director, Institute for Social and Economic Change.
Since revenue expenditure is more than 80% of revenue, the state has little money to spend on development works. “Any small emergency or unforeseen expenditure like Covid-19 and the government will have to cut allocation from other sectors or borrow,” said another expert.


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Sagar Biswas

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