Karnataka's economy did not perform well in any sector: RS Deshpande
State's economy has not performed satisfactorily in any sector during last year with aggregate growth rate falling to 6.9% from 7.3%.
When Chief Minister Siddaramaiah stood up to present his budget, most believed it would be tailored to woo the people with the Assembly elections coming up next year.
But we also need to look at the macroeconomics that the budget is based on. The state's economy has not performed satisfactorily in any sector during the last year with the aggregate growth rate falling to 6.9 per cent from 7.3 per cent.
In fact, in the agricultural sector it has fallen to a dismal 1.2 per cent and in the industrial sector, to 2.2 per cent from 4.9 per cent the last year. It has gone down by 2 per cent even the services sector.
Of course a number of factors are responsible such as the poor monsoon, demonetisation, price collapse, lack of investment and delay in release of funds from the Centre.
But the Chief Minister has come out with the expected sops, except the loan waiver for farmers. His attempt has been to cover as many areas of society as possible while ignoring the economic efficiency of these allocations and their impact on the state's overall growth.
One finds it difficult to justify the allocations by any economic rationale. While the agriculture sector has been allocated Rs 5,080 crore, the women and child welfare department has been given Rs 4,926 crore and social welfare, Rs 6,363 crore when over the last few years the last department has failed to utilise over Rs 13, 000 crore.
Although the budget cries out for more revenue, no specific effort seems to have made on this front. But the Chief Minister has thought it prudent to waive VAT on beer, fenny and hard drinks in the interests of these consumers.
One must, however, appreciate the allocations made for irrigation and primary education, and the efforts taken for the MSME sector, which will certainly bring a smile to the faces of these small businessmen. The higher allocation for housing also needs to be applauded.
(R.S. Deshpande is director, Centre for Development Studies, PES University, Bengaluru)