Karnataka government has no magic wand, says B S Yediyurappa on fiscal stress

Chief Minister B S Yediyurappa on Wednesday defended his government's decision to borrow more loans to fund developmental works.

In his reply to the discussion on the 2021-22 Budget in the Legislative Assembly, Yediyurappa asked how could the government revive the economy without resorting to loans. "When governments in the past have raised loans in times of prosperity, how can we take up development works without borrowing money when Karnataka is facing adverse conditions due to the pandemic and floods," he asked.

The government, he said, was borrowing loans only to ensure that the development cycle is maintained while ensuring relief for those affected by the pandemic.

In 2021-22 fiscal, Karnataka is set to borrow Rs 71,642 crore. In the previous 2020-21 fiscal, the state resorted to borrowing Rs 70,671 crore.

Yediyurappa's read out his reply amidst sloganeering and disorder by Congress legislators who were protesting in the well of the Assembly demanding a court-monitored probe into the sex scandal allegedly involving former minister Ramesh Jarkiholi and that he should be booked for rape. Also, Congress wants the resignation of six ministers who moved the court seeking an injunction against the media.

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There was no "magic wand" with the government nor was the treasury an "Akshaya Patra" in the face of an unprecedented global pandemic, he said.

"I've presented eight budgets of which seven were revenue surplus ones. But, the dire conditions faced by the state has made it impossible. The government is ready to initiate corrective measures to address the situation," he said, referring to the revenue deficit budget this time.

The government has come under fire for committed expenditure amounting to 102% of revenue receipts. "A few people think that committed expenditure meant salaries, administrative expenses and loan servicing. But, this is a misconception," Yediyurappa said, adding that it included grant-in-aid to local bodies, social security pensions and other financial assistance measures.

Yediyurappa also said that Karnataka had to lose out on its share in devolution as the 15th Finance Commission prioritized the welfare of backward states.

Dismissing allegations of decrease in the Scheduled Class Sub-Plan and Tribal Sub-Plan (SCP-TSP) allocation, Yediyurappa said the outlay in the new fiscal will be equal to what it was last year - Rs 27,700 crore.

The government has already set up committees to merge various departments to rationalize expenditure and enhance non-tax revenue collection to improve the state's finances, he added.