BSY defends proposed hike in taxes on fuel

Bengaluru: Karnataka Chief Minister B S Yediyurappa on Thursday defended the proposed hike of three per cent in taxes on petrol and diesel, saying it was “necessary.”

In the budget tabled, the chief minister has mooted three per cent hike in petrol and diesel from the existing 32 per cent and 21 per cent respectively.

Addressing a post-budget press conference, he said, “It’s only seven months since we came to power. The previous government’s loan waiver scheme and other expenditure are well-known facts. Revenues from the Centre had come down.

To streamline this, there was a necessity to increase the taxes.”

Yediyurappa further said he was expecting Rs 1,500 crore revenue by increasing the petrol and diesel prices.

Conceding that the economic slump in the country has affected the state’s earnings too, the Chief Minister said he presented a budget “remaining within our limits, where we gave priority to irrigations and all other sectors.”

The state government has decided to press the Centre to release its share of funds, in a 15th Finance Commission meeting on March 13, where Home Minister Basavaraj Bommai would submit a memorandum to the union government.

The government is looking at the meeting as an opportunity to explain about the decline in state’s revenue and put forth its demand to release its share.

“The inter-state distribution has reduced from 4.7 to 3.6 per cent. That’s why, there is a shortage of Rs 11,000 crore in this year’s budget estimate. The inter-state distribution has reduced for all the states,” Yediyurappa said.

The Law and Parliamentary Affair Minister J C Madhu Swamy who was present, said the state government may borrow Rs 52,918 crore in the event of denial of grants from the Centre.

“There is no reduction in our revenue. Chief Minister has clearly said that we will get Rs 3,000 crore from the new taxes.

We cannot fulfil from our taxes. We will ask them (Centre). Or else, the fiscal deficit will run… we will run the government with borrowings,” Swamy said.

“Rs 52,918 crore borrowing is meant only for capital expenditure. It will be spent across the department

Irrigation, minor irrigation and so on,” he added.

Another obligation straining the financial position of the state was the proposal to waive off interests and penal interests on medium and long term loans of farmers, which they had borrowed from cooperative banks and PLD banks. It was about Rs 400 crore, Swamy said.