The Hindu : Karnataka / Bangalore News : Off-budget borrowings to be eliminated

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Wednesday, Jul 23, 2008
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Karnataka

Karnataka - Bangalore

Off-budget borrowings to be eliminated

Special Correspondent

It will, among other things, reduce cost of debt servicing

The goal will be attained in the current fiscal year
MTFP calls for borrowings to be brought on budget

BANGALORE: The State is all set to attain the goal of eliminating fresh off-budget borrowings in the current fiscal year (2008-09).

The Medium-Term Fiscal Plan (MTFP) for Karnataka 2008-12 envisages elimination of fresh off-budget borrowings from 2008-09 by bringing them on budget. This has already been reflected in the State’s revised estimates for 2007-08, with Rs. 733 crore provided in the budget and only Rs. 102 crore allowed for off-budget borrowing despite a provision for Rs. 835 crore for the year.

Chief Minister B.S. Yeddyurappa tabled the MTFP in the Legislative Assembly on Monday.

With the complete elimination of fresh off-budget borrowings in 2008-09, it is expected that the various special purpose vehicles will be able to focus on project management and implementation. It will also make for transparent and effective debt management, besides reducing the cost of debt servicing, the MTFP states.

The MTFP stresses the need for improvement in the quality of expenditure and effectiveness in programme implementation. More than 30 per cent of the Plan expenditure was incurred in March, it says.

Commercial taxes

The growth of commercial taxes has declined from 30.05 per cent (Rs. 10,057 crore) in 2004-05 to 20.13 per cent (Rs. 16,474 crore) in 2007-08. Preliminary accounts of the total collection under commercial taxes were lower by Rs. 1,000 crore from the revised estimates, the document says.

Lower growth in sales tax and entry tax on petrol and diesel had put a drag on total revenue growth in 2007-08. Growth in revenue from sale of petrol and diesel has been low owing to non-revision of prices and the recent decision to lower the tax itself. The lower growth has been compounded by reduced collections under central sales tax due to reduction in the rate from 4 per cent to 3 per cent. Central sales tax has now been reduced to two per cent.

In the case of stamps and registration, there has been a shortfall of almost Rs. 800 crore from the budgetary estimates of Rs. 4,400 crore, as of March-end, 2008. This has been attributed to the sharp reduction in the number of documents registered in and around Bangalore.

“Hardening of interest rates on housing loans, slowdown in the real-estate market and restrictions imposed by the Government on registration of properties without prescribed documents are some of the reasons being cited for the reduction in the number of documents registered,” the MTFP states.

Royalty on minerals

Receipts from royalty on major and minor minerals in 2007-08 were expected to be lower by Rs. 150 crore than the budget estimates of Rs. 600 crore.

Improved enforcement, computerisation and expected revision of royalty rates on major minerals are likely to yield revenue of Rs. 632 crore in 2008-09, according to the MTFP.

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