Karnataka chief minister HD Kumaraswamy is set to present the state Budget on Thursday, the first of the Congress-Janata Dal (Secular) government. And attention will be focused on the farm loan waiver package he promised in the election manifesto of the JD(S).
The chief minister had promised to waive all farm loans, totaling Rs 53,000 crore, according to the manifesto, within 24 hours of taking office. However, citing that he had not got a majority to follow through completely on that promise, Kumaraswamy had assured farmers in the state that he would announce a phased roll-out of the waiver.
Congress president Rahul Gandhi, too, weighed in on the Budget. “On the eve of the Karnataka Budget, I’m confident our Congress-JDS coalition Govt will act on our commitment to waive farmer loans & to make farming more profitable. This budget is an opportunity for our government to make Karnataka a beacon of hope for farmers all across India,” he tweeted.
While expectations are high, Kumaraswamy faces a difficult task on Thursday, especially given the fact that the coordinati- on committee of the coalition government headed by former chief minister Siddaramaiah has dec- ided to continue with the welfare schemes announced by the previous Congress government.
There had been much discussion on the nature of the Budget, with Siddaramaiah calling for a supplementary Budget rather than a fresh on, as he had presented a full-fledged Budget only in March, ahead of the state assembly elections.
According to economist D Raj- ashekhar, faculty at the Institute for Social and Economic Change, the farm loan waiver is likely to be a token one as the state’s finances might not be able to support the whole waiver envisaged by the JD(S) in its manifesto.
“In his Budget, Siddaramaiah had estimated revenue receipts to be ~1.62 lakh crore, and as he is known to be sound on the state’s finances, having presented 13 Budget, I think it would be fairly accurate,” Rajashekhar said. “If this is accurate, then at Rs 53,000 cr- ore, the farm loan waiver will be almost a third of the receipts. He- nce, that is unlikely to happen.”
Rajashekhar said, according to him, the waiver would be partial and there were two options before the chief minister in this scenario. Kumaraswamy could either announce the waiving off of interest payments on farm loans or waiver of loans of small and marginal farmers. In both these cases, he said, the financial burden would not be very high.
“Additionally, in case of a full waiver, the credit system in the state will be adversely impacted. But a phased waiver will not result in such a scenario,” Rajashekhar said. The economist said there were two areas where no go- vernment would think of a cut in expenditure, agriculture and its allied sectors and social welfare sector. Education and health sectors, he said, were most likely to face the brunt of any pruning the government might undertake.
“At present, education as a whole forms 12% of total expenditure and the health sector accounts for 4%. These are likely the sectors where there might be cutbacks, because these are not critical in terms of electoral fortunes,” Rajashekhar said.
Political analyst Narayana A, faculty at the Azim Premji University, said the task for Kumaraswamy was made that much harder considering the unprecendented focus the JD(S) manifesto had received. “The manifesto was more prominent in this election than had been the case previously,” he said.
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