Karnataka Budget: Cash-Strapped Govt Hikes Duty on Liquor, Fuel

CM BS Yediyurappa. 

(Photo: PTI)

Karnataka Chief Minister BS Yediyurappa presented the state budget with a total expenditure of Rs 2,37,893 crore, on Thursday, 5 March. The government which is cash-starved after the central government slashed the state’s share from central funds, presented a budget with a marginal increase of 1.5 percent compared to 2019.

During his budget speech, the chief minister acknowledged that reduction in the divisive pools from the central funds, as per the 15th pay commission’s recommendations, has cost the state Rs 8,887 crore. This has resulted in an “inevitable” cut in expenditure.

Tax on Fuel, Liquor Increased

In its attempts to make up for the reduction in central funds, the government has increased the tax on petrol from 32 percent to 35 percent and diesel from 21 percent to 24 percent, translating to an increase Rs 1.60 per litre of petrol and Rs 1.59 on diesel.

CM Yediyurappa also announced a 6 percent increase in excise duty on IML across all 18 slabs.

In the hopes of raising additional funds from the sector, the Excise Department’s targets for the financial year have been increased from Rs 20,950 crore to Rs 22,700 crore.

Focus on Farmers

The chief minister, who kept his focus on the farmers in the state, allocated Rs 32,250 crore for agriculture. He earmarked Rs 467 crore for waving interest on agricultural loans, which he said would benefit 92,000 farmers.

Calling it a special feature of current budget, Yediyurappa announced a Child Budget “for the first time in the history of the state.” Rs 36340 crore has been allocated for this purpose.

Other Schemes Announced

In another schemes to be implemented across the state, self defense training will be provided to women at concessional rates in police training schools and headquarters of armed reserve units across the states.

Each MLA will have to adopt three government schools in their respective constituency for the betterment of education and infrastructure in the school. Similarly, two Saturdays in a month, will be designated as ‘bag free days’ in government schools.

The government has also announced free monthly bus passes for one lakh women working in garment factories across the state and Rs 25 crore has been earmarked for this project.

Allocation for Bengaluru

Rs 8,772 crore was earmarked for fuelling Bengaluru’s growth engine.

Yediyurappa announced Rs 500 crore for implementing the suburban rail project in Bengaluru. To boost public transport, Bengaluru Metropolitan Transport Corporation (BMTC) will purchase 1,500 diesel buses at an expenditure of Rs 600 crore. The project will be implemented over a period of seven years. The government has also announced Rs 100 crore for 500 ordinary electric buses as well.

The budget has also announced a comprehensive mobility programme for Bengaluru which aims to increase the utilisation of public transport from 48 percent to 73 percent.

In an effort to decongest traffic in Bengaluru, Yediyurappa has announced Rs 14,500 crore towards developing the peripheral ring road in the city. He also announced Rs 100 crore towards the development of lakes and funds for increasing transport capacity at Hebbal, silk board and KR Puram areas.

This is Yediyurappa’s sixth budget as finance minister. He had presented two budgets as deputy CM holding the finance portfolio during the BJP-JD(S) coalition between 2006 and 2007 and three as CM between 2008 and 2010.