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HIGHLIGHTS OF KARNATAKA’S BUDGET 2008-09

OVERVIEW OF THE BUDGET

1.The Budget of Government of Karnataka for 2008-09 with an outlay of
Rs.56542.15 crores from the State Consolidated fund has been
presented in Parliament. The Budget focuses on promoting “Growth
with Equity”.

2.The emphasis in 2008-09 budget will be on sustaining the economic
growth of the State while seeking to uplift the economically and
socially weaker sections.

3.In particular, the budget seeks to promote the development of human
capital in the State by enhanced investments in education, health and
social welfare. Further, the budget also seeks to initiate special steps to
improve the productivity of the agricultural sector and the economic
condition of the farmers.

4.The total outlay of Rs.56542.15 crores for 2008-09 represents an increase
of 12% over the budgeted outlay of the State for the year 2007-08 which
was Rs.50465.60 crore. The State’s annual plan for 2008-09 is to have an
outlay of Rs.21751 crores which reflects an increase of about 22% over
the 2007-08 annual plan outlay of Rs.17782.56 crores.

5.As required under the Karnataka Fiscal Responsibility Act, 2002 the
State’s budget for 2008-09 has a revenue surplus which is estimated at
Rs.2972.65 crores. This will maintain Karnataka’s record of a revenue
surplus financial position continuously since 2004-05.

6.As required under the Fiscal Responsibility Act, the Fiscal Deficit for
2008-09 will be within 3% of the State’s estimated GSDP (Gross State
Domestic Product) of Rs.244043 crores. Again Karnataka has
maintained a fiscal deficit of less than 3% of GSDP since 2004-05.

7. By maintaining the revenue surplus position and limiting the fiscal
deficit to less than 3% the State will continue to receive the benefits of
debt consolidation and wavier of central loans amounting to about
Rs.650 crores per year.

8.The Medium Term Fiscal Plan 2008-2012 presented with the budget
will be the guide for moving forward on the path of fiscal prudence
and sustainability.

9.The State’s GSDP is projected to grow at a real growth rate of 9%.
Inflation is assumed to remain at 4% during 2008-09.

BUDGET ESTIMATES 2008-09

Receipts

i The revenue receipts of the Government of Karnataka for
2008-09 are estimated at Rs.46188.70 crores. This represents a
13.31% increase over the budget estimates of Rs.40762.09 crores
and 13.09 % over the revised estimates of Rs.40840.22 crores for
2007-08. The estimate of own tax revenues of the State for
2008-09 are Rs.31445.93 crores with a projected increase of
Rs.4754.76 crores (17.81%) over the 2007-08 budget estimates of
Rs.26691.17 crores. The devolution of central taxes and grants in
aid to the State are estimated as Rs.12811.12 crores for the
financial year 2008-09.

ii.Under own tax revenues, the total collection from Commercial
Taxes is estimated to be Rs.19344 crores which represents a
growth of 17.42% over the revised estimates of 2007-08. No new
taxes are proposed in the Budget. To mobilize the resources as
projected, the focus will be on rigorous enforcement, widening
of tax base and recovery of arrears. Intensive use of Information
Technology will be made for these purposes.

iii.The total collections from State Excise are estimated at
Rs.5626.08 crores, which represents a growth of 20.51% over the
revised estimates for 2007-08.

iv.It is estimated to mobilize an amount of Rs.269.97 crores under
non-debt capital receipts. Out of this Rs.200 crores is estimated
to be mobilized from the sale of land.

Expenditure

i. The revenue expenditure of the Government of Karnataka for
2008-09 is estimated at Rs.43216.05 crores. This will result in a
revenue surplus of Rs.2972.65 crores, which continues the record
of Karnataka as a revenue surplus State since 2004-05. The
capital expenditure for 2008-09 is estimated at Rs.10168.92
crores. The total expenditure (excluding repayment of loans)
will be Rs.53384.98 crores as compared to Rs.47816.13 crores
budgeted for 2007-08. The projected fiscal deficit for 2008-09 is
Rs.6926.31 crores. As a proportion of the estimated Gross State
Domestic Product of Rs.244043 crores, the fiscal deficit of
Rs.6926.31 crores amounts to 2.84%, which is within the limit of
3% of GSDP stipulated in the Karnataka Fiscal Responsibility
Act, 2002.

MAJOR ALLOCATIONS

AGRICULTURE & ALLIED ACTIVITIES AND IRRIGATION

i. The total allocation under Agriculture & Horticulture has
increased to Rs.1564.51 crores as against Rs.1315.02 crores for
2007-08. An amount of Rs.220 crores is earmarked for special
initiatives under Agriculture and Horticulture to improve the
economic condition of farmers in the State. This is in addition to
Rs.184 crores budgeted under the Rashtriya Krishi Vikas Yojana.

ii. Important programmes under Agriculture Department like
supply of seeds at subsidized price, crop insurance, support for
farm mechanization, and subsidy for drip irrigation would
continue. It is proposed to avail maximum funds under the
National Horticulture Mission. An amount of Rs.108.35 crores is
provided under the Comprehensive Watershed Development
Project. A new initiative for recharge of Ground water is
planned with an outlay of Rs.10 crores.

iii. The total allocation under Major, Medium & Minor Irrigation is
budgeted at Rs.4542 crores. An additional amount of Rs.500
crores is expected under Government of India’s Accelerated
Irrigation Benefit Programme on account of the step up in
outlay provided in Union Budget. The Emphasis is to be on
completion of ongoing projects so as to bring more acreage
under assured irrigation.

iv. The scheme of agricultural credit through cooperative credit
institutions at the subsidized interest rate of 4% will continue.
An allocation of Rs.112 crores is provided for the same. A
similar scheme for fishermen and wea vers will also continue.

v. An amount of Rs.40 crores is provided as State support for
Yashaswini Health Scheme for members of Cooperative
societies.

vi.The allocation under Animal Husbandry and Fisheries has been
increased from Rs.487.57 crores in 2007-08 to Rs.549.23 crores in
2008-09. An amount of Rs.39.60 crores is provided under
Rashtriya Krishi Vikas Yojana and Rs.25 crores provided for
new initiatives under Animal Husbandry in line with 11th plan
objectives. Matsya Ashraya housing programme for fishermen is
to be scaled up with an outlay of Rs.15 crores. Fisheries
development under the Rashtriya Krishi Vikas Yojana is to be
taken up at an outlay of Rs.26.40 crores. The existing
programmes of strengthening of Veterinary services and
distribution of milch animals through Karnataka Milk
federation to destitute women will also continue.

vii. An outlay of Rs.138.45 crores is earmarked for Karnataka
Sustainable Forest Management and Bio-Diversity Conservation
project. Social Forestry works through Panchayats are planned
with an outlay of Rs.20 crores.

viii. The existing scheme of providing foodgrains at Rs.3/- per KG to
BPL beneficiaries through the Public Distribution System is to
continue. New initiatives in Food security planned with an
outlay of Rs.25 crores to undertake local procurement
operations for coarse foodgrains and augment the availability of
food grains in the Public Distribution System.



Source: Government of karnataka