Bangalore, July 12, 2013, DHNS:

Despite facing severe fund crunch to finance popular schemes, Chief Minister Siddaramaiah did not risk burdening the common man with new taxes in the first Budget of the newly-elected Congress government on Friday.

At the same time, he stopped short of announcing any new big ticket programme.

Siddaramaiah, who also holds the finance portfolio, in his Budget presentation on Friday in Vidhana Soudha, gave top priority to the OBCs and SC/STs in education, allocation of subsidies and provision of grants across departments, a mark of gratitude to communities who voted for the Congress in the Assembly elections.

Nearly 40 per cent of the promises made in the party’s election manifesto has been incorporated in the Budget, he said.

The chief minister, a veteran of seven budgets, even proposed to marginally slash sales tax on diesel. Consequently, price of the fuel will come down by 51 paise per litre from August 1.

The chief minister, who had come under criticism for exploring the possibility of providing cheap liquor to the poor, proposed to increase the price of hard liquor. He announced an across-the-board increase in Additional Excise Duty (AED) as part of additional resource mobilisation measure.

The cheapest brand in the market, which costs Rs 37 a 180 ml bottle, will become dearer by Rs 3. The move is anticipated to fetch the government Rs 800 crore.

Siddaramaiah has not touched stamp duty and motor vehicles taxes, which are among the prime sources of revenue for the State exchequer.

Siddaramaiah retained most programmes of the previous government, including the Bhoo Chetana, Sakaala and Bhagyalakshmi schemes. At the same time, he decided to keep the agricultural community in good humour by announcing loans to farmers up to Rs 2 lakh at zero per cent.

“I’m not in favour of dividing Hindus and Christians. All citizens, all voters, are my countrymen. So my basic philosophy is, I don’t address this issue like this. And that is a danger to democracy also. Religion should not be an instrument in democratic process,’’ he said.

Loans from cooperative institutions between Rs 2-3 lakh will be provided at one per cent interest. Earlier, short term loan up to Rs 1 lakh was provided at zero per cent. One per cent interest was charged for Rs 1-3 lakh loans. His predecessor Jagadish Shettar had extended this concession for farmers.

Siddaramaiah announced that the creamy layer income limit for backward classes would be increased from the existing Rs 3.5 lakh to Rs 4.5 lakh. A new scheme, “Food and Residential Assistance Scheme,” has been announced wherein Rs 15,000 per annum will be provided to post-metric OBC students who secure admission to student hostels.

Siddaramaiah has not announced any new game-changer programmes in the Budget.

Thirty kg of rice to BPL families per month continues to be the government’s flagship programme. Siddaramaiah had announced the programme on the day he assumed office.

Policy-wise, not many new initiatives were announced, except that the ruling dispensation wanted to restructure government schools as “Shikshana Samarasya Vidya Kendras” with improvement in infrastructure. Some of the new schemes announced include “Manaswini,” wherein a monthly pension of Rs 500 will be provided to unmarried BPL women above 40 years and “Mythri,” a Rs 500 monthly pension to sexual minorities.

Siddaramaiah has done some financial jugglery to fund populist schemes. He has decided against rolling back Value Added Tax (VAT) slabs, which were hiked by 0.5 percentage point by the previous government to fund the crop loan waiver scheme to benefit farmers reeling under severe drought.  The VAT slabs will continue at 14.5 and 5.5 per cent, fetching the government at least Rs 800 crore this fiscal.

While stamp duty has been retained at 5 per cent, land registration will cost more as the government has already increased guidance value by around 40 per cent in 20 districts.

In a nutshell

Burden 
-0.5 percentage point  increase in VAT rate effected last year to mobilise resources for drought relief, to be continued

– Increase in additional excise duty on hard liquor from 16 to 40 pc

Relief

-Sales tax on diesel reduced from 16.75 pc to 15.65 pc. Diesel price likely to drop
by 51 paise per litre

-Tax exemption on footwear costing up to Rs 300 per pair

– 1 pc entry tax on sugar replaced by 1 pc VAT

KEY ANNOUNCEMENTS

– Creamy layer limit of backward classes enhanced to Rs 4.50 lakh from Rs 3.5 lakh
– Incentive of Rs 2 per girl student per day in Class I
– Manaswini – Rs 500 monthly pension to BPL unmarried women above 40 years age
– Mythri – Rs 500 monthly pension to sexual minorities
-Revision of HRA for govt employees after bifurcating cities & rural areas as A, B and C categories
– City cluster development in Bangalore metropolitan
area at Rs 2,100 crore
– Rs 150 cr to make Bangalore, Mysore, Mangalore,
Belgaum & Hubli-Dharwad public-safe cities
– Weavers package of Rs 100 crore
– Encouragement of Neera-based products
– Setting up of Agriculture Prices Commission
-Setting up of calamity mitigation fund
– 9 State highways to be developed under PPP