Government tables report of Mid Year Review of State Finances
The Mid Year Review of State Finances has termed the fiscal position of Karnataka as ‘weak’ due to a drop in revenue collection on account of the second wave of COVID-19. At the same time, it has observed that Karnataka has shown signs of economic recovery and has been moving towards normalcy from the second quarter of this financial year due to the efforts to combat the spread of the pandemic through vaccination coverage.
The review report was tabled in the Assembly on December 17. It points out a shortfall in collection of tax revenue due to the impact of the pandemic in the first quarter of financial year 2021-22. The State had collected revenue receipts of ₹83,031 crore till September 2021 as against the budgetary target of ₹86,136 crore.
However, it has also noticed a recovery in revenue collection from the second quarter of the year with the slowdown of the spread of the pandemic in Karnataka. The report has suggested taking all possible measures to ensure full collection of revenue by the end of the financial year.
The report has referred to the finding by Fiscal Management Review Committee (FMRC), led by the Chief Secretary, that the state is providing funds beyond the SDRF and NDRF norms for flood-affected districts. It has pointed out that the committee has recommended sticking to the expenditure (in disaster relief) as per guidelines prescribed by the Centre.
The report expresses concern over the increased financial commitments with respect to major and minor irrigation works as well as those taken up by the Public Works Department. The financial commitments are in the range of five to eight times their annual budgets. In this context, it has has advised that new works should not be sanctioned till the financial commitments are brought down to a ratio of 1:3 in terms of actual budget and financial requirement for carrying out works.
At the same time, the report has advised the Finance Department to increase expenditure on key areas of social infrastructure, like health and education, considering the reduced expenditure on these sectors in the first half of 2021-22 compared with budget estimates.
The Fiscal Management Review Committee has acknowledged constitution of the second Administrative Reforms Commission (ARC-2) by the Karnataka Government and hoped that it may aid in rationalising schemes, restructuring and merging certain departments besides abolishing certain unnecessary posts.
Source: Read Full Article