Budget on a tight leash

CM advised against announcing grand projects

With just about a fortnight to go for the State Budget, Chief Minister B.S. Yediyurappa is learnt to be under pressure not to announce any big-ticket schemes owing to the precarious situation of the State treasury.

Finance Department officials have advised the Chief Minister not to announce schemes that will burden the State finances, a senior Minister aware of the developments said. This advice has come multiple times from multiple revenue-generating departments within the Finance Department. “There is also an advice to reduce the Budget compared with that of the previous year’s, which, however, may not happen. We had a Budget size of about ₹2.34 lakh crore for this financial year, and the government may be able to increase it only marginally,” the Minister said.

Central fund shortfall

The Chief Minister acknowledged in Mysuru on Friday that the State was staring at a shortfall from the Central funding. “We are estimating a shortfall of ₹10,000 to ₹11,000 crore from the Central funds. I am also expecting that we will achieve our revenue targets. Everything will be known in the Budget,” he told reporters.

After taking a vote on account from the legislature soon after assuming power, Mr. Yediyurappa had little elbow room to present his own budget and was forced to settle for a modified budget that was based on the one presented by his predecessor H.D. Kumaraswamy.

While the funds from the Centre through the share of State in GST or devolution has affected the budget planning, sources in the government said that the State’s decision to deviate from the NDRF norms to provide relief to the flood victims affected the finances. The State has received about ₹2,800 crore on a demand of ₹30,000 crore for flood relief, and expecting the Centre’s help, relief work, including that of compensation for house damage, had been taken up, sources said.

Loan waiver

“Another big effect was owing to the loan waiver scheme implemented by the previous Janata Dal (Secular)–Congress regime,” sources said, and added that the revenue-earning departments such as Stamps and Registration, Excise, and Transport may not achieve the target completely, giving further trouble in planning the Budget.

On Thursday, Leader of the Opposition in the Assembly Siddaramaiah pointed out that State had received ₹8,851 crore as GST compensation as against the expected ₹17,249 crore, and the Centre’s devolution of funds to State was expected to come down from ₹39,591 crore in 2019–20 to ₹28,598 crore in 2020–21.

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