Floods have hit financial health of Karnataka, says govt

The unprecedented flood fury that left northern and coastal Karnataka reeling added to the state’s financial woes too, as the government was forced to provide Rs2,500crore towards flood-relief.

Chief minister BS Yeddyurappa rejected demands from the opposition that farm loans of the flood-affected be waived: “The state government can only consider waiver of farm loans to flood victims if the Centre agrees to reimburse the amount,” he said.
“We have serious financial limitations. We cannot stretch beyond our means,” Yeddyurappa said in the legislative council on Thursday, regretting that he could not waive farm loans of the flood-hit.

Meanwhile, the mid-term review of the state’s finances threw light on what the chief minister was trying to explain. In a nutshell, it presents a grim picture. The state government has failed to reach its budget targets in revenue mobilisation. This is expected to hit several welfare programmes, including farm loan waivers to the flood-hit in North Karnataka, and provision of rice at Rs2 per kg to the poor.

The report states that the shortfall in realisation of commercial taxes for the year till September-end 2009, is expected to be about Rs2,125 crore. It would be about Rs263 crore for motor vehicles tax and Rs1,267 crore for revenue from stamps and registration.
Under the non-tax revenues, the realisation at end-September 2009 was Rs970cr, which is 45.6% of the budget estimate of Rs2,129cr. The state hopes to exceed its target by Rs144cr under this head, based on the fact that the Union government has recently revised royalty rates on ores and mineral.

The total revenue receipts at the end of September 2009 amount to Rs19,942 crore, including the state’s own revenue receipts of Rs13,539 crore and central taxes of Rs3215 crore. This is 41% of the estimated total of Rs48,389 crore for the year.

The shortfall in revenue mobilisation has been attributed to the economic slowdown in the first half of the current financial year. The government is optimistic of making up to some extent in the second half of the current year.