Never faced such difficulties before, says Yediyurappa in Budget 2020-21 speech

Deccan Chronicle.  | b aravinda shetty

Nation, Current Affairs

Karnataka in a tight squeeze: central funds down, GST share down, salaries and debt up

Karnataka chief minister B S Yediyurappa presents the budget in the Karnataka Assembly on March 5, 2020. (PTI)

Bengaluru: Karnataka’s annual budget for 2020-21 clearly reflects the impact of the economic slowdown in the country. Both central funds to the state and GST compensation have fallen.

Presenting the budget in the state Assembly, chief minister B S Yediyurappa admitted that the state could not reach its 2019-2020 budget target due to a reduction of Rs 8,887 in central funds and Rs 3000 in GST compensation.

And rubbing salt into the wound, Karnataka will get Rs 11,215 crore less this year because the 15th Finance Commission has cut the state’s share of central resources by 1.07 per cent.

Thus state has decided to submit a revised memorandum to the 15th Finance Commission seeking to set right the loss caused to the state in 2020-2021.

Yediyurappa admitted the difficulties in his speech: “Compared to the previous year, there was a drastic increase in expenditure, amounting to Rs. 10,000 crore, due to government employees’ salaries and pensions and interest payable on government loans. Due to a reduction of the state’s share of Central revenues, there are serious difficulties being faced in resource mobilization. This magnitude of economic difficulties was never faced by our state.”

Karnataka recorded a gross state domestic product (GSDP) growth rate of 4.8 per cent in industry sector; 7.9 per cent in services.

Despite revenue losses, Yediyurappa decided to continue his pet projects, the Bhagyalakshmi scheme and distribution of bicycles to students.

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