From Our Special Correspondent
Daijiworld Media Network

Bangalore, Feb 25: Rarely, if ever, State Governments present their annual budget ahead of the Union Budget which is normally presented on the last working day of February, though there is no legal or constitutional bar.
But, unless the states concerned are facing assembly elections, the state governments generally prefer to present their annual budgets after the Union Budgets so as to tune their respective budgets taking advantage of the schemes announced by the Centre as also the likely Central grants that may accrue.

However, Karnataka Chief Minister B S Yeddyurappa had made up his mind to present the state’s annual budget ahead of the Union Budget almost a month earlier even without the compulsions of having to face any assembly polls and thereby incur the wrath of the Election Commission.

The most commonly attributed reason, according to political circles, is the possibility of the Chief Minister being forced to quit or dissolve the assembly on account of the various corruption charges and land scams against him as also the criminal cases lodged against him following the State Governor H R Bhardwaj according sanction to two city-based lawyers or the possibility of the Supreme Court’s judgement on the disqualification of the 11 BJP MLAs going against the ruling party. The Chief Minister, according to his political opponents, wanted to come out with a populist budget and thereby go before the people seeking a fresh resounding mandate, which would then be argued as a popular endorsement for his rule negating all the charges.

But both the State BJP Chief K S Eshwarappa as well as Yeddyurappa have clarified that there was no proposal to dissolve the state assembly and go in for early assembly polls before they are due in May 2013 in view of the charges and cases against the Chief Minister  and that the Yeddyurappa regime will last its full five-year term.
Be that as it may, the big question being asked by almost everybody is what is so special about Yeddyurappa’s budget proposals for the year 2011-12, which in fact is his sixth.  Except for the presentation of a first-of-its-kind separate budget for Agriculture Sector, which is not in vogue either in the states or at the Centre, there does not seem to be anything significant in Karnataka’s budget for the coming year.

Even the agri-budget does not have anything special except the provision of crop loans at a lowest 1 % interest rate. But this facility is available only for the crop loans upto Rs 3 lakh from cooperative institutions. But then, a larger number of farmers dependent on commercial banks will be eligible only for crop loans at 3 % interest rate upto a limit of Rs 50,000. Thus, though Yeddyurappa will be able to brag about his farmer-friendly credentials and the various sops and incentives given by his government to the farmers during the last 33 months, it is doubtful whether that would cut much ice with the large number of rural voters or their urban counterparts.

That apart, is there anything special about the general budget? Well, Yeddyurappa had promised to come out with a tax-free budget. He was also expected to come out with populist budget in keeping with political speculation that the BJP regime might be going in for dissolution of the assembly and snap assembly polls.

But what exactly did happen? First things first. Yeddyurappa’s budget for the year 2011-12 is not a tax-free budget. The Additional Resource Mobilisation (ARM) from the budget with revision of various tax rates and procedures is expected to generate Rs 1,020 crore. The major components of ARM are: betting tax Rs 40 crore, gold and jewellery Rs 70 crore, stamp and registration Rs 300 crore, motor vehicle tax Rs 20 crore and the biggest chunk of Rs 500 crore from excise, according to the Chief Minister.

The only sops, if they can be considered as such, is the continuation of the tax exemption on paddy, rice, wheat, pulses and products of rice and wheat for one more year from April 2011 and exemption of coconut (excluding copra), de-oiled bran from value added tax (VAT). Tax on kitchen utensils, barbed wire and caps will come down from 13.5 % to 5 %. Also, the price limit for school bags for the benefit of reduced tax of 5 % will be increased from Rs 200 to Rs 500. However, a wide range of items which are currently liable to VAT rate of 13.5 % will go up to 14 % while VAT on jewellery and articles of gold and other noble metals, precious and semi-precious stones will go up from 1 to 2 %. All these measures, should fetch about Rs 500 crore, Yeddyurapa said.

However, the biggest tax burden will be on tipplers with the levy of Additional Excise Duty of 10 % taking the tax liability to 20 % across all the 17 slabs of excise besides increase of Declared Price Slabs by Rs 25 across all the 17 slabs. All these hikes in excise duties and strict enforcement measures are targeted to raise the excise revenue target to Rs 9,200 crore during 2011-12 from Rs 8,200 crore in 2010-11.

In sharp contrast to the expectations of the launch of several populist schemes, the Chief Minister has avoided the temptation of going in for such vote-catching or please-all gimmicks. Of course, the honoraria of Adhyaksha, Upadhyaksha and members of zilla panchayats and taluk panchayats have been increased to Rs 3000, Rs 2250 and Rs 1500 and Rs 2250, Rs 1500 and Rs 750 respectively. Similarly, the monthly food allowance of pre-matric and post-matric students has been increased from Rs 650 to Rs 750 and from Rs 750 to Rs 850 during 2011-12, the annual scholarships to students upto VII Standard, who are not residing in hostels will be raised from Rs 75 to Rs 250 and for students studying in VIII gto X standards from Rs 100 to Rs 500; the Anganawadi workers and helpers will get enhanced from Rs 2500 to Rs 3000 and from Rs 1250 to Rs 1500 besides the matching contribution towards their contributory pension scheme will be given at Rs 150 and Rs 75 respectively and the grama sahayaks will get enhanced monthly honorarium from Rs 3000 to Rs 3500.

On the education sector, the distribution of free text books presently available to students from I to VIII standards in both aided and unaided schools will be extended to students of IX and X Standards and the `Nali-Kali’ scheme presently available to students of I and II standards is being extended to III standard. Sportspersons of the State selected for participation in national sports events will be provided with a special training allowance of Rs 100 per day while attending training camps.

As for the nearly 6 lakh state government employees, who have urging the government to constitute the VIth pay commission, the chief minister has merely  promised to set up a pay committee. Will that satisfy the well-organized state government employees, who are capable of paralyzing the administration, remains to be seen.
However, all these measures and sops cannot be considered populist programmes that might sway the opinion of the people.

Of course, the Chief Minister has come out with several Bangalore-specific schemes and programmes with a combined total outlay of Rs 4,770 crore or programmes for enhancement of power generation, tourism development and various other infrastructure schemes including those for the development of Kannada.

But, it is difficult to understand the rationale in advancing the state budget and fixing it much earlier than the Union Railway or General Budgets or for that matter, presenting the state budget for the year 2011-12 before all other states unless it was the Chief Minister’s intention to go to across the state for being the first state in the entire country to unveil a separate budget for agriculture.