Karnataka saw the state GDP contract by 2.6 percent in FY21 due to the pandemic, according to Chief Minister BS Yediyurappa, who presented the state budget for FY22 on Monday (March 8). However, despite the impact from the pandemic on the state's finances, the government has chosen to not increase state tax on petrol and diesel and has kept excise duty on liquor unchanged.

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In further good news for citizens, Karnataka also cut stamp duty on apartments valued between Rs 35-45 lakh to 3 percent from 5 percent. According to members of Confederation of Rea Estate Developers Association of India (CREDAI), the 3 percent rate was so far applicable to houses up to Rs 35 lakh.

The Karnataka government's decision to keep liquor excise duty unchanged comes even as it increased the revenue target for the Excise Department for FY22 to Rs 24,580 crore, higher than the FY21 target of Rs 22,700 crore.

The Excise Department has been able to mobilise only Rs 20,900 as of February, but the government said it is confident of reaching the FY21 target by end of the month. The government had last year hiked liquor excise duty significantly, first by 6 percent in March 2020 and then by an additional 11 percent in May.

A total of Rs. 7,795 crore is allocated for the development of Bengaluru. This includes Rs 850 crore for SubUrban Rail, Intl Business Park, 58.2 km ring road, a super-speciality hospital for poor and migrants, Janarogya centres and Tree Parks.

COVID-19 impact

"The GSDP has seen a downfall due to lockdown for controlling the COVID-19 pandemic during FY21. As per initial estimations based on fixed [prices, the GSDP has contracted by 2.6% in comparison with that of 2019-20," the chief minister said.

The industrial sector saw a contraction of 5.1 percent, while the services sector contracted by 3.1 percent. However, the agriculture sector grew by 6.4 percent, despite a tough year wherein there were floods in North Karnataka. To provide more relief to farmers, the state government has amended the APMC Act, to cut the market fee from 1.5 percent to 0.6 percent.

Karnataka's Budget Estimates for FY22 entail total receipts of Rs 2,43,734 crore and total expenditure of Rs 2,46,207 crore. The fiscal deficit will be 3.48 percent of GSDP.

Karnataka has proposed a Venture Capital fund of Rs 100 crore to boost entrepreneurs in the state, of which Rs 25 crore will be contributed by the state and the rest from other institutions.

Karnataka has also proposed a cybersecurity policy and a data centre policy.

First Published:Mar 8, 2021 4:09 PM IST