The Chief Minister of Karnataka, Siddaramaiah, had on Saturday issued a press note to explain the salient features of his state budget for 2023-24 presented to the assembly on July 7. The note starts with a riposte to Prime Minister Narendra Modi, who a few days ago taunted the Karnataka poll plank of five guarantees as amounting to continued guarantee of corruption by the Congress Party.

While addressing his party workers in Bhopal last week, the Prime Minister gave his own guarantee to gun after each corrupt person in the country. It was Siddaramaiah’s turn to hit back saying his budget fulfils all the five guarantees.

“The Budget 2023-24 is a budget which fulfils all the Guarantees we have announced. This is the ‘Guarantee Budget’ of our government. The total budget size for 2023-24 is estimated at Rs.3,27,747 crore and a total of Rs.35,410 crore has been allocated in the budget for all the five Guarantees. “

It is not enough to provide for the promises or guarantees in the budget. The devil lies in implementation. P. Chidambaram, the Congress stalwart, took a dig at the finance minister Nirmala Sitharaman’s 2023-24 union budget which had provided for a massive Rs 2.40 lakh crore for Railways capex budget by taunting that allocations do not translate into expenditure so as to create employment.

Karnataka guarantee budget can be similarly taunted. Two years ago, its neighbouring state Tamil Nadu Chief Minister had made a reckless promise of Rs 1500 per month to the senior most woman member of every family. His own then Finance Minister Palanivel Thiagarajan was honest enough to criticise the move as untargetted and made in vacuum, in the absence of data. Two years down, the amount has dwindled to Rs 1,000 per month and the exercise for enrolment set to start.

The Karnataka CM's press note waxes eloquent about fulfilling the five promises or guarantees. But the only concrete steps taken by the budget to bridging the funding gap are 20 percent hike in country-made-liquor and a hike in property tax on the back of refixation of guidance or stamp duty values of properties.

While the hike in excise duty on liquor is kosher on the ground that vice taxes always meet with public and fiscal purists’ approval, arm-twisting revenue officials could lead to high-pitch assessments and harassment. These measures in any case are likely to just scratch the surface of the problem of finding resources to bankroll universal subsidies.

The lion’s share of the five guarantees will be taken away by the Gruha Lakshmi scheme under which each woman would get Rs 2000 per month to compensate for the rampaging inflation. This takes roughly 50 percent of the guarantees for all the five schemes. Once again, the devil lies in the details.

Enrolment is going to start mid-July and implementation from the Independence Day i.e., 15, August. Would the IT czars, super rich, well-endowed and techies of the state enrol themselves? Perhaps they might give-it-up.

Gruha Jyoti comes next though not in the pecking order. It replicates the Kejriwal's Delhi model of 200 units of free electricity per month free to all denizens of the state. So far 1 crore households have already registered. Rs 9000 crore subsidy on this score envisaged. The third guarantee shakti scheme means free travel for women in government buses taking a leaf from the Delhi model as enthusiastically adopted by the Stalin government in TN.

Under annabhagya scheme, in addition to 5 kg free rice provided by the central government, the state government too would provide another 5 kg per month free entailing a budget of Rs 10275 crore. Yuva Nidhi scheme is intended to provide moral support to unemployed youth by providing financial assistance of Rs. 3,000 per month to degree holders and Rs.1,500 per month for Diploma holders for two years. Nearly 3.7 lakh youth will benefit from this scheme. This is akin to the unemployment doles given in the US except that in Karnataka the youth will stop getting their rainchecks after two years. The press note smugly says the five schemes amount to universal basic income scheme (prevalent in many Nordic countries) and would be a first in India.

Subsidies and freebies should be targeted and not be universal. When you make them universal it cuts into the entitlements of the below the poverty level (BPL) segment. The Karnataka guarantee budget is likely to rank high in the Prime Minister’s upcoming electoral speeches. He has been mincing no words in calling such freebies ‘rewaris’ i.e., subsidies promised in anticipation of votes. But the million-dollar question is what is rewari and what is genuine subsidy.

— The author, S Murlidharan, is a CA by qualification, and writes on economic issues, fiscal and commercial laws. The views expressed are personal.

Read his previous articles here

(Edited by : C H Unnikrishnan)