Karnataka - Bangalore   

No to off-budget borrowings next fiscal

BANGALORE: The State is all set to attain the goal of eliminating off-budget borrowings.

A 32-page Medium-Term Fiscal Plan (MTFP) for Karnataka 2008-12, envisages elimination of fresh off-budget borrowings and bringing them on budget.

This has already been reflected in the State’s revised estimates for 2007-08, with Rs. 735 crore being provided in the budget with only Rs. 102 crore allowed for off-budget borrowing despite a provision of Rs. 835 crore for the year.

With the complete elimination of fresh off-budget borrowings in 2008-09, it is expected that the various special purpose vehicles would be able to focus more on project management and implementation.

It would also facilitate transparent and effective debt management, besides reducing the cost of debt servicing.

The MTFP stressed the need for improvement in the quality of expenditure and effectiveness in programme implementation.

“Though higher outlays are being provided in the area of public works, irrigation, energy, health and education, the productivity of expenditure needs to be substantially improved,” it said.

The plan has underscored the need for checking the practice of crowding of plan expenditure during the last quarter, particularly back-loading of expenditure in the last month of a financial year as it compromised the quality of expenditure besides leading to spill-over of expenditure to the next financial year.

The MTFP has paid attention to programme performance budgeting in all departments since the large number of schemes complicate monitoring and implementation.

It expressed concern over the present utilisation of power and food subsidies. There is an urgent need to undertake 100 per cent metering to disburse power subsidy for irrigation pump sets, and consensus needs to be achieved to make any progress in the matter,” MTFP observed.

It also projected the State’s economy to grow with a real growth rate of 9 per cent during the MTFP period.

The MTFP noted the phasing out of tax on inter-State sales to registered dealers under the Central Sales Tax Act. The rate had been reduced from 4 per cent to 3 per cent in 2007-08, and it is projected that it would be further reduced to 2 per cent in the coming fiscal.

“There is a consensus on phasing it out, as it is a tax on export of goods from one State to the other, paid by the consuming State to the producing State,” it said. The tax has been cascading in nature and rebate has been available in the State of consumption.

Stating that action had already been initiated to compile a database of Government guarantees given through various administrative departments, the MTFP said the Cooperation Department has been chosen as a pilot department for the purpose.

The next course of action after the compilation of data would be to assess the guarantees for their risk status and to institutionalise a dynamic monitoring mechanism, it said.

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