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Siddaramaiah govt has not fared too badly

Written by PaperDabba

The Siddaramaiah government may have fared badly at the hustings, but it ticks most boxes when it comes to fiscal prudence.

Karnataka has performed extremely well on several financial parameters. On ‘ease of doing business’, the State has jumped three places to 10, compared with 15 for Tamil Nadu and 11 for Maharashtra, the two States where most of the country’s manufacturing facilities are situated.

In terms of wooing foreign investment, it is next only to Tamil Nadu, apart from being the fourth-largest recipient of foreign investments between 2000-2016. But the biggest positive for the State is the gap between its revenue and expenses which is the lowest compared with Maharashtra and Tamil Nadu.

Even the government’s allocation for populist schemes are well within the 25 per cent limit of debt outstanding of the State’s GSDP. The outlay for welfare programme have increased the State’s liabilities from ₹2.42-lakh crore to ₹2.86-lakh crore, increasing the share of debt-to-GSDP to 20.36 per cent, from 18.93 per cent.

“The government has borrowed but there is space for borrowing. The data we have does not show a debt burden,” said Kshitija Joshi, a professor at the National Institute of Advanced Studies.

Karnataka’s fiscal deficit for 2018-19 is expected to be at ₹35,127 crore or 2.49 per cent of GSDP, lower than the 3.3 per cent target set by the Centre. “Karnataka has fared much better than the rest of the southern States and has met all the fiscal benchmarks,” said Joshi.

Joshi said Siddaramaiah’s welfare schemes had touched the bottom of the pyramid and that his investment in irrigation schemes have had excellent results. “The State has the highest GDP growth rate and has gone in hand in hand with socio-economic schemes. All this has come at a fiscal cost for the State, but are much below the benchmark set by the 14th Finance Commission,” she said.

Not so rosy

But there are others who say that the State’s share in the national manufacturing pie and the agricultural output has been declining. Farming-related loans in Karnataka are around ₹1.2-lakh crore, of which crop loan total ₹52,000 crore. Of these, ₹42,000 crore of loans were borrowed by farmers from nationalised and commercial banks and another ₹10,000 crore from cooperative banks. Last year, Siddaramaiah had waived ₹8,165 crore of this ₹10,000 crore.

And yet, what it was a spate of farmer suicides that sullied the Siddaramaiah government’s image. Between April 2013 and November 2017, there were as many as 3,515 suicides, of which 2,525 were because of drought and farm failure, as per the state agriculture department.

Critics of Siddaramaiah point out that despite floating a loan waiver scheme, the ‘Runamukta Bhagya’, the Congress government has failed to address the issue of irrigation. They say that only 31 per cent of all agricultural land has been irrigated so far.

While Siddaramaiah was expected to sympathise with the farmers, he blamed money-lenders for charging exorbitant interest rates.

The Congress government also dragged its feet on infrastructure in Bengaluru, which alone contributes 60 per cent of the total revenues to the State, a fact admitted by the State party working president, Dinesh Gundu Rao. In a recent interview to BusinessLine, Gundu Rao said that by the time they rolled out schemes for the city, it was a bit too late.

According to a recent survey, the city loses a whopping ₹38,000 crore every year as a result of the social cost of traffic congestion. Travel during peak hour traffic takes an average of 162 per cent more time than the same distance travelled during off-peak hours, according to a study by the Boston Consulting Group, commissioned by taxi hailing service, Uber.

Kshitija Joshi of NIAS said that while it was true that Bengaluru faces infrastructure bottlenecks, the Congress government has been able to create more jobs unlike the previous governments. “This (lesser seats for the Congress) is certainly not a statement of his economic policies. It can be attributed to the rhetoric created by the opposition parties,” she said.

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