Karnataka: Can BS Yediyurappa put brakes on committed expenditure? | Bengaluru News – Times of India

BENGALURU: Unbridled committed expenditure is said to be the main worry for chief minister BS Yediyurappa who is set to present his eighth budget on Monday. Revenue expenditure that was estimated for 2020-21 at 76% of the total expenditure (around Rs 2.4 lakh crore) is feared to have crossed 82%, leaving very little room for productive spending in the new budget.
Yediyurappa had proposed the revenue expenditure to be Rs 1.8 lakh crore in the budget with an outlay of around Rs 2.4 lakh crore as he presented it last year with no inkling of the impending pandemic crisis. The estimation has gone awry with unexpected spending on Covid and flood relief clubbed with other expenses taking revenue expenditure close to Rs 2 lakh crore, said government officials.
“The situation is quite alarming as even a good chunk of borrowing is expected to be unproductive revenue expenditure this time. It is a big challenge and we’re trying to tide over by cutting unproductive spending as much as possible,” said an official.
Revenue expenditure comprises operational costs, subsidies and exigencies that do not lead to asset creation or returns in the form of income. Committed expenditure that goes to payments of salaries, pension and interest on loans forms the main chunk of revenue expenditure and it has gone up from Rs 59,499 crore in 2018-19 to Rs 81,718 crore in 2020-21.
“A positive aspect of the rising committed expenditure is that it ensures money in the pockets of people in the form of income. But, it should not be allowed to grow beyond a certain point as it causes dearth of funds for development and job creation. We expect Yediyurappa to strike a fine balance,” said Jyotsna Jha, director of Centre for Budget and Policy Studies.
The government said it has spent around Rs 5,500 crore on Covid management and Rs 2,500 crore on flood-relief operations. These came as additional spending at a time when the Centre reduced Karnataka’s share of tax devolution drastically. The state took a cut of Rs 5,941 crore in its share for 2020-21 as the Centre rejected the 15th Finance Commission’s recommendation to pay a special grant to Karnataka. “Given the situation, the state government has got more responsibility this time. The budget should focus on increasing the capital expenditure (spending on development and asset creation) ensuring adequate investment on priority sectors such as agriculture and health. Efforts should be made to curb revenue expenditure through fiscal prudence,” said BDA Satya Babu Bose, director at Centre for Rural Studies and Development.
The government has embarked on pruning the salary bill through steps like merging departments and cutting extra flab in terms of committed expenditure. The CM has appointed an administrative reforms committee headed by ex-chief secretary TM Vijay Bhaskar, a few recommendations of which are expected in the budget.
Budget session from today

The budget session of legislature beginning Thursday is likely to be stormy with issues, including demands for reservation by various communities and allegations against former minister Ramesh Jarkiholi, set to dominate the proceedings. It will see the first two days reserved for a discussion on One Nation, One Election, which is being held following advice of Prime Minister Narendra Modi. Meanwhile, a workshop on budget and state finances was held for legislators on Wednesday.

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Sagar Biswas

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