Presenting a revenue surplus budget for the first time in eight years, Karnataka deputy chief minister Siddharamiah, who also holds the finance portfolio said, “this signals the commitment to reform state finances and to ensure that the current expenditure is met by current revenues.”
Budget 2004-05 envisages a revenue surplus of Rs 72.84 crore.
“Increased revenue balances in future years will enable creation of additional assets and also ensure that the borrowings are only used for capital expenditure. The fiscal deficit is reined in at Rs 4246.64 crore compared to Rs 5564 crore in 2003-04,” Mr Siddharamiah said.
Total receipts are expected to be Rs 320065.99 crore, comprising revenue receipts of Rs 25510.31 crore and capital receipts of Rs 6555.68 crore.
Total expenditure for the year is projected to be Rs 31591.88 crore, including a revenue outgo of Rs 25437.48 crore and a capital expenditure of Rs 6154.40 crore.
The additional resources are expected to come from increase in tax and non tax resource mobilisation, rationalisation to stop leakages, rightsizing of government, pensions reforms, lowering administrative costs and so on.
The minister announced enhancement in allocations in key development areas - primary education, primary healthcare, agriculture, rural development and drinking water.
Tax structures have been rationalised, paving the way for VAT implementation from April next year. The existing 14 tax slabs have been brought down to four slabs - of 4, 8, 12 and 16 per cent. Special tax rates of 1, 20 and 28 per cent have been introduced for specified products.
The budget proposes to collect Rs 150 crore through additional resource mobilisation measures. Revenue increase is expected to come from the withdrawal of tax concessions as well as additional levies.
The tax concession on goods sold in defence canteens (8 per cent on luxury goods and 4 per cent on other goods) will be withdrawn. Tax concessions of 4 per cent on diesel and other petroleum products sold to captive power generation will also be withdrawn.
New levies include a road cess of 10 per cent and infrastructure cess of 5 per cent on bricks, charcoal, coir products, copper ingots/wire, gypsum, stones and all kinds of mill yarn.
Sales tax has been reduced 125 commodities and 43 types of contracts, entailing a revenue loss of Rs 100 crore to the exchequer.
Reflecting the priorities of the Common Minimum Programme, the budget gave special emphasis to agriculture. Plan outlay for the sector doubled to Rs 840 crore, 104 per cent more than Rs 412 crore a year ago.
The minister proposed agricultural credit at 6 per cent through cooperative banks, for which he has set aside Rs 60 crore. Compound interest and penal interest on crop loans have been abolished. He also announced waiver of dues of about 20,000 farmers, who have repaid an amount equal to principal and simple interest on loans. About Rs 49 crore has been set aside to provide this relief.
