Karnataka assembly passes bill to raise state's borrowing limit from 3% of GSDP to 5%

A bill amending Fiscal Responsibility Act to raise Karnataka's borrowing limits from 3 per cent of Gross State Domestic Product to 5 per cent for year 2020-21 was passed by Karnataka assembly on Friday, opposing which Congress std a walk out.

Karnataka Fiscal Responsibility (Amendment) Bill, 2020, that amends 2002 act, will allow state, which is facing a severe financial crunch due to COVID-19 pandemic, to raise an ditional Rs 36,000 crore in loan, to meet various expenditures, without violating fiscal discipline. bill, in its statement of objective as reasons, states that it amends Section 4 of 2002 act to raise fiscal deficit to 5 per cent of estimated GSDP for year 2020-21 as a one time relaxation.

Commending bill for consideration of house, on behalf of Chief Minister B S Yediyurappa, Law Minister J C Mhuswamy said, "we are in difficult times....this ditional 2 per cent raise will make Karnataka eligible to get Rs 36,000 crore". Of this, we have decided to borrow Rs 33,000 crore."

 

He also me it clear that this relaxation will be only for this year, considering current circumstances and expected shortfall in revenue due to pandemic.This government does t have an diction to borrowing and does t want to unnecessarily put a burden on people by borrowing.

"We have to do this to keep things going," Minister said, as he rejected opposition's criticism of pushing state into debt.

centre in May h agreed to raise borrowing limit of states from 3 per cent of GSDP to 5 per cent in 2020-21.However, Congress, led by Leer of Opposition Siddaramaiah, opposed move to increase limit to 5 per cent.

Alleging that government's fiscal policies are t right, he warned against pushing state into debt by increasing limit to 5 per cent of GSDP and insisted it be raised to 3.5 per cent to man situation.As government did t pay heed to his demand, Siddaramaiah, along with Congress legislators, std a walk out, following which Speaker Vishweshwar Hegde Kri put bill to vote and it was passed by a voice vote.

Yediyurappa h earlier in budget h estimated total borrowings at Rs 52,918 crore.Earlier, participating in discussion on bill, Siddaramaiah cautioned government to be "prudent" in collection of taxes and in expenditure or else state will go 20 years backward.

Asking government to bring down committed expenditure as orwise it will be "very difficult", he said, committed expenditure- to pay salary, interest payment, subsidies among ors- has alrey reached 90 per cent, and only 10 per cent be left for development expenditure.

"How will development happen?" He strongly pitched for drastic steps to cut down wasteful expenditure, increasing n tax revenues, doing away with unnecessary posts in government bureaucracy.

Some members also raised concern about borrowed amount being used to meet committed expenditure too.Siddaramaiah even questioned government why it was silent on GST compensation and on issue of Centre denying about Rs 5,495 crore special grant recommended by Finance Commission following shortfall of 1.07 per cent in state's share of central taxes for 2020-21 under 15th Finance Commission, compared to 14th one.

On shortfall in GST revenue, he also questioned why Karnataka could t ask centre to borrow for state, and reby keep up its commitment to compensate states.Among or bills passed was Bengaluru Development Authority (Amendment) Bill to regularise an estimated 70,000 unauthorised properties in layouts developed by Bangalore Development Authority (BDA), by levying a penalty.

This BDA amendment act will w replace ordinance to this effect which was promulgated in May. ors were Karnataka Municipal Corporations (Second Amendment) Bill, Karnataka State Civil Services (Amendment) Bill, Karnataka GST (Amendment) Bill.