Notwithstanding state’s debt liabilities of 5.6 lakh crore inherited from previous BJP government, Siddaramaiah government has taken a crucial decision to implement five poll guarantees which may cost a whopping over Rs 40,000 crores though total expenditures may go beyond Rs 2.42 lakh crore if all promises are fulfilled.
In consonance with election manifesto of Congress party, new government in its first meeting took the decision to issue notification to execute five guarantees including 200 units of free power, Rs 2,000 for the woman head of a family, 10 kg of rice free to every member of a BPL household, Rs 3000 a month for unemployed degree holders and Rs 1,500 a month for diploma holders for two years and free bus rides for women across the state.
Besides it, party manifesto promises about the completion of pending projects like Krishna, upper Krishna and upper Bhadra (2,000,00 crore), old pension scheme for employees (2,000 crore) besides other poll promises to rural people.
To give a realistic touch to the poll guarantees, AICC president, Malik Arjun Kharge, Rahul Gandhi had promised to give these promises practical shape in the first cabinet meeting of the new government which became reality today.
Pro people promises
Congress party’s five guarantees will cost about Rs 40,000 crore annually (15% of the state budget). Rahul Gandhi mentioned about the promise made to fishermen which include guaranteed ₹10 lakh insurance cover, ₹1 lakh interest-free loan for fisherwoman and 500 litres of diesel every day with subsidy of ₹25 per litre Rahul also satirically reminded the people about the false promise of prime minister Narender Modi about transfer of Rs 15 lakh in the bank account of every citizen in the country.
Implement old pension scheme (OPS)
Economic experts opine that 3 lakh employees of Karnataka government fall under New pension scheme (NPS) of center which had replaced OPS in 2003 during Atal Bihari regime. Now restoration of OPS may require Rs 2,000 crore per annum which will acquire upward trend in future thereby burdening the state exchequer.
The Union government has put the Himachal government in fix over its decision to revert to OPS and refused to transfer Rs 8,000 crore which form the part of employees’ contribution in NPS since the past 18 years.
Center has also sent a letter to Himachal government which disapproves budgetary proposal of imposing water Cess on the projects to generate funds to fulfil poll promises. Center calls it unconstitutional and gave hint not to approve its over draft demand in future if it did not withdraw water cess.
Centre has also refused to transfer about Rs 36,000 crore of Rajasthan government which is contribution of lakhs of employees under New pension scheme as it has already implemented Old pension scheme (OPS) and expects full support of employees during ensuing assembly polls in Nov. this year which has rattled BJP.
In an identical manner, the centre will refuse to return approximately Rs 19,000 crore to Karnataka government which may force it to opt for resource mobilisation to fund the OPS. Like Himachal, employees supported Congress in assembly polls in Karnataka but even the Reserve bank of India has cautioned states not to revert to OPS as it will lead to accumulation of liabilities which can become a major risk to the economy in future. Even creation of ten lakh jobs and fulfilling 2,5 lakh vacancies will add to the burden of the state budget.
Completion of pending projects
Former Congress chief minister, Siddaramaiah had promised Rs 50,000 crore for irrigation projects like Krishna, Upper Krishna and Upper Bhadra, among others and spent Rs 58,000 crore but now there is a bigger challenge of allocating Rs 40,000 per annum for 5 years to complete these projects.
Economically vibrant state
Economists are optimist about the capacity of Karnataka to bear the burden of freebies announced by Congress in its manifestos as its revenue collection target excluding GST for 2022-23 was Rs 72,000 crore but it had achieved Rs 83,010 crores by January, 2023 end and it will show ascending trend with every passing year.
A latest economic survey says that there may be additional borrowings of Rs 1.70 lakh crore in 3 years and accumulation under this head may jump to a whooping figure of 7.30 lakh crore by 2026-27. However, the revenue receipts will also attain an upward trend which may touch 2.90 lakh crore in 4 years thereby registering the growth of 30% which is a very good sign of a stable and healthy economy. State’s Gross State Domestic Product of Rs 3.05 lakh is the highest amongst five states in the country.
Finally, senior Karnataka leaders of Congress say that a sound economy and avenues of resource mobilisation will make it possible to implement all poll guarantees which can be attributed to Karnataka’s highest share of services in the state, gross value additions of 66.1 % in 2022 besides contributing 8.8% in National Gross Domestic Product.
Observers say that Karnataka has got immense importance to political parties as it can easily generate resources to contest the central or states’ elections which might have given a big relief to Congress which faces BJP having unlimited resources at its command.
Finally, analysts feel that Karnataka’s sound economy may pave the way for the implementation of poll guarantees and reap the fruits during 2024 parliamentary elections in 2024.
(Writer is political analyst and senior journalist based Shimla)
DISCLAIMER: The views and opinions expressed in this article are the personal opinions of the author.
The facts, analysis, assumptions and perspective appearing in the article do not reflect the views of GK.