Chief Minister Siddaramaiah to present the budget today

Bengaluru: With the increasing expenditure on one hand and drowsy economic development on the other, Chief Minister Siddaramaiah should take tough decisions as he presents the 2018-19 state budget at 11.30 am on Friday.

He should guarantee a good vibe factor and keep up fiscal discipline in front of the eagerly awaited Assembly elections.

Siddaramaiah, who will lead the Congress in the coming elections, is relied upon to charm all areas – farmers, Ahinda communities (Kannada acronym for minorities, Dalits and in reverse classes), state government employees, merchants, women and youth – through his financial plan, which is the last one of his government.

The aggregate cost of the 2018-19 budget is expected to cross Rs 2 lakh crore. Chief Minister is probably going to give out complimentary gifts like free laptops and transport passes to students and present more Bhagya plans (sponsorship plans) such a Vastra Bhagya, other than declaring big infrastructure projects in cities and towns, particularly Bengaluru, all together to please urban voters.

The greatest test for the Chief Minister, who likewise holds the financial portfolio, is that he needs to guarantee all these without depending on any new tax assessment measures, keeping in mind that it will upset the voters. Revenue mobilization will be a huge challenge. With the economy experiencing a slow stage, there may not be any noteworthy hop in revenue collection in the coming fiscal year.

In the current financial year, the government will barely reach its targets under four major revenue (own tax) sources – Commercial taxes, State Excise, Stamps and Registration and Motor Vehicle taxes. On the non-tax front, it is unlikely to meet the target – it had collected just Rs 2,601 crore till September last year against the annual target of Rs 6,945 crore.

In addition, the revenue surplus position is required to arrive in a desperate predicament; a simple Rs 137 crore as assessed in the present year’s financial plan, leaving next to no space for taking up new formative projects in the coming fiscal.

The tax productivity or the tax to Gross State Domestic Product (GSDP) ratio, as well, has seen a decrease in the previous couple of years.

Because of a disturbing rise in expenditure in the present year, primarily by virtue of endowment plans and crop loan waiver, the government turned to eliminating budgetary portions to different departments.

The finance-starving government even used cash reserves of its public sector enterprise – Mysore Minerals Ltd (MML) – to meet the additional expenditure.

The Chief Secretary-headed Fiscal Management Review Committee (FMRC), which evaluated the mid-year financial and debt  position, had as of late forewarned against the mounting expenditure and advised the Chief Minister it to re-priorities the expenses, prune non-essential spending and modify rates of non-tax income sources.

In the event that Siddaramaiah proceeds with his rampage spending binge in the coming budgetary year, at that point it is probably going to influence key parts such education, health, rural and urban development in the coming fiscal, a Finance division official cautioned.