Karnataka Budget 2023 Analysis Part 2

My friend said the State government puts the money into pits, potholes, drainage, garbage, wells, lakes, rivers and sea! A speaker in a seminar said the  Central Government’s budget is progressive, and the State Government’s budget is nothing but doling out freebies. Is it true, or how much of it is true? Let’s run through the budget allocations. As we know, Karnataka State will spend over Rs.3,03,000 Crores in FY 2023-24.

Objective – The Federal Government deals with macroeconomic issues, and so is its pattern of spending, whereas the States have to deal at ground Zero level, directly with & among the people and address their issues. Economic growth through sustainable livelihood, gender equality, regional balancing, etc., are the focus of States. So, naturally, the focus is entirely different; therefore, I align with the spending pattern of both governments. No complaints.

Support to Agriculture Sector – They assist farmers from the stage of sowing to marketing. Some of them are Rs.2000 per year per farmer additional payout (under PM Kisan Yojna), diesel subsidy, financial assistance for drip irrigation, electricity subsidy, Crop Insurance premium, Minimum Support Price for certain crops, Interest-free short-term Loan of Rs.5 Lakhs to farmers, spending on conservation of forestry and protection of wildlife, etc.; all totalling to Rs.18,937 Crores.

Support to Health and Education – How do they spend? Honorarium to the Asha workers, Anganwadi workers, Mid-day Meal Cooks, Guest Lecturers, Guest Teachers, Grama Sahayakas, Supervisors of Grama Panchayat Libraries and members of Grama Panchayats. Free education in Government pre-university and Government degree colleges, construction of new classrooms and toilets, setting up seven new universities and upgrading the existing engineering colleges as Karnataka Institute of Technology (KIT) in line with IITs. Many schemes in the healthcare sector have also been announced at a total allocation of Rs.81,084 Crores.

Expenditure on General Services includes administration of Justice, MLA/MLC’s salary, election, Police, Jail, Stationery, Printing, Vigilance, Pension, etc. The allocation is Rs. 47,800 Crore. Guess how much the pension of retired government employees would cost the exchequer? It’s Rs.27,000 Crore per year! Imagine the Interest on borrowing (Loan taken by the State). This alone burns a big hole of Rs.36,000 Crore per year!

Allocation for Capital spending – We all wish that our tax-paid money be well spent and for economic development, right? How much of our wish can be realized in the State Budget?

It’s like Mr A gets a salary of Rs.1,00,000 per month and spends close to Rs.80,000 towards Rent, groceries, travel, medicine, insurance, school fees, petrol, taxes, etc., and reserves Rs.20,000 for Capital creation like the purchase of house/plot, stocks, etc. Likewise, the Karnataka Government reserves Rs.55,000 crore towards capital outlay (20% of total receipts).

Wow. Still, this is not small money. But why are we not seeing any visible changes? The State is so vast; infrastructure requirements are too many, and the cost of execution is too high. Therefore, the meagre sum of money spread across various projects in bits and pieces, spent here and there across the State, can’t result in a visible change. This is the reality, embrace the facts, accept the truth and move on happily with the hope of grander changes in the days to come.

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About B E Kumar Prasad

B E Kumar Prasad
He is a Practicing Chartered Accountant in Bengaluru, India. He has 28+ years of experience in income tax, business setup, and NRI matters. He is also an Insolvency Professional, Registered Valuer (F&SA) and Social Auditor.Prasad welcomes your comments and questions. Please email him at simplifiedlaws20@gmail.com

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