The growth rate of Karnataka’s Gross State Domestic Product (GSDP) has slowed down from 7.3 percent during 2015-16 to 6.9 percent during the closing fiscal 2016-17.
Chief Minister Siddaramaiah in his budget speech on Wednesday attributed the decline in the overall growth rate of industry and service sectors. “The industry sector is expected to grow at 2.2 percent compared to 4.9 percent during previous year, while the service sector is expected to register a growth of 8.5 percent during the current year as compared to 10.4 percent the previous year,” he stated in the budget speech. Agriculture sector is expected to grow by 1.5 percent this year.
However, the budget speech is silent on the reason for the decline in growth rate of industry and service sectors. Though the budget speech includes a strong critique of demonetisation and its implementation by the Union government, Mr. Siddaramaiah has not blamed the slowed growth rate on the initiative.
Contrary to reports that the budget size this year will touch ₹ 2 lakh crore, the budget outlay this time is billed at ₹1,86,561 crore, with the total revenue receipts estimated to be ₹1,82,119 crore. This compared to a budget of ₹1,63,419 core during 2016-17.
Fiscal parameters maintained
The 2017-18 budget has a fiscal deficit of ₹33,359 crore, 2.61% of GSDP, as mandated by Karnataka Fiscal Responsibility Act. Last budget the deficit was 2.12% of the GSDP. The State has added borrowings of ₹37,092 crore this fiscal, taking the total liabilities of the State to ₹2,42,420 crore by the end of 2017-18. This will be 18.93% of the GSDP, well within the 25% cut off mandated by the Karnataka Fiscal Responsibility Act.
No planned and non-planned budget anymore
The State budget has also done away with the distinction between planned and non-planned expenditure from this budget, keeping in tune with the national initiative. However, Karnataka SC-ST sub plan, according to which 24.10% is allocated for the communities, has been exempted from this and the sub-plan allocation will only include planned expenditure, Mr. Siddaramaiah clarified.