K'taka budget evokes mixed reactions

The Karnataka budget for 2010-11 presented by chief minister B S Yeddyurappa last week, his fifth as finance minister and third as chief minister, has drawn mixed reactions from the chambers of commerce and industry in the state.

The Bangalore Chamber of Industry and Commerce (BCIC), which has welcomed certain measures like the higher allocation towards primary education, agriculture, urban infrastructure, health and social sectors, has expressed disappointment over the burgeoning fiscal deficit which now stands at of Rs 9,708 crore. “There is no clear road map on the part of the state government to reduce the same in the coming years,” BCIC President, K R Girish said.

However, there is no focus towards services sector which contributes 54 per cent of the state’s GDP namely, IT, Biotechnology among others is rather disappointing, he said.

The BCIC has welcomed the introduction of its suggestion for introducing a Kar Samadhan Scheme both under the commercial taxes and state excise laws. Also, re-introduction of Advance Ruling Mechanism will lead to better compliance and reduced litigation, Girish said.

“Our view is that the Budget aims mainly at maintaining status-quo and does not have any bold measures to propel industrial growth in the state despite the Global Investors’ Meet which is round the corner,” he said.

BCIC has broadly hailed measures like an allocation of Rs 8,830 crore in primary education. The government has taken a very bold step by providing 50 per cent reservation for women in gram panchayats. Establishment of 1,000 ITI’s under the PPP is a laudable one but the absence of adequate fund allocation is a bit surprising. The increased allocation of funds amounting to Rs 18,872 crore for Bangalore urban infrastructure, is a very much required one, a move that would improve Bangalore’s image. However, the continuing neglect of development of the North Karnataka region is disappointing, Girish added.

J Crasta, President, Federation of Karnataka Chambers of Commerce and Industry (FKCCI) termed the budget as a progressive and vision-oriented.

However, he cautioned that the allocations made in many sectors should be properly utilised to derive the needed development. The increase in tax rates to 5 per cent from 4 per cent 13.5 per cent from 12.5 per cent appears to be a necessary evil. The increase in rates will affect the common man, he said.

Sajan Poovayya, chairman, FICCI, Karnataka State Council said, “The lack of focus on health is disappointing. There is an urgent need for the state to initiate reforms in the health sector, such that primary and secondary health care is available to the bottom of the pyramid citizens. Whilst Yashaswini has worked well over the last year, the budget does not have grand allocations to expend the foot print of Yashaswini.”

Although the budget has long term plans for augmenting power in the state, there is very little in the budget for satisfying the power deficiency in the short term. In the absence of the power deficit being corrected, programmes such as Bhagyajyothi and Niranthara Jyothi may remain ineffective, he said.