The Hindu : Economists hail State Budget

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Sunday, Mar 23, 2003

Southern States

Southern States - Karnataka-Bangalore

Economists hail State Budget

By Our Special Correspondent

BANGALORE MARCH 22. Many economists and political scientists have welcomed the State Budget for 2003-04 presented by the Chief Minister, S.M. Krishna, on Friday which promises several welfare schemes for farmers, women, and poorer sections of society.

"The Budget is pro-farmer, pro-poor, people-friendly, and rural-centric," says Rajiv Gowda of the Indian Institute of Management (IIM), Bangalore.

It has made all efforts to address the problems faced by farmers due to the drought, says Prof. Gowda, who is an expert in public finance.

"Generally, Mr. Krishna is regarded as pro-urban, but he has presented a Budget to empower people in rural areas." Proposals to increase the allocation for the Stree Shakti Scheme, sanction fair price shops under the public distribution system to self-help groups formed under the scheme, and to increase the honorarium of anganwadi workers are some of the steps to empower weaker sections of society, he says.

"The Budget is highly ambitious with limited resources," says R.S. Deshpande of ISEC, Bangalore. The allocation for irrigation and flood control has been increased (31 per cent). The Chief Minister has announced many schemes that may increase the fiscal deficit. The move to waive interest on farm loans will increase the burden on the exchequer, he adds.

He has welcomed the Government's decision to set up "raithara santhes" in all taluk headquarters and "Food Karnataka Ltd." which, he says will give a boost to the agro-processing industry.

R.G. Desai of Bangalore University, Ragiv Gowda, and G. Thimmaiah, economists, have hailed the Government for its decision to implement the recommendations of the D.M Nanjundappa Committee and the Tax Reforms Commission headed by the former Chief Minister, M. Veerappa Moily.

"Despite the drought and resource constraints, the Government has presented a good Budget," says Prof. G. Thimmaiah. Proposals to constitute a "Mukhya Mantri Grameena Abhivrudhi Nidhi" with a corpus of Rs. 100 crore to repair roads in rural areas, and increase the subsidy for organic manure such as compost, vermi-compost, and bio-fertilizer from 25 to 50 per cent will encourage farmers to adopt organic farming, he adds.

Hemalatha Rao of ISEC, Bangalore, says except a few shortcomings, the Budget is a healthy one. However, it has not clearly specified the Government's policy on VAT. Though the Government has announced the introduction of VAT, it has retained sales tax. The introduction of VAT will increase the State's dependency on the Centre, and this will affect the fiscal balance if the Government does not take steps to correct it, she adds.

"The Budget is highly optimistic." For the first time, the Government has introduced public-private partnership initiatives in sectors such as tourism and agro-food processing, Prof. Desai says.

However, by giving priority to the Bombay Karnataka region, the Chief Minister has neglected the Hyderabad Karnataka region, he points out.

The Government's decision to increase the grant for gram panchayats from Rs. 3.5 lakh to Rs. 5 lakh each will strengthen them, says N. Sivanna, an expert in panchayat raj and politics. However, there is a need to give them more political powers, he adds.

The economists have appreciated the Government's decision to set up institutions such as a university of veterinary sciences in Bidar, a commissionerate of public instruction for Bombay Karnataka and Hyderabad Karnataka regions, a women's university in Bijapur, and "Food Karnataka Ltd."

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