The Bharatiya Janata Party (BJP) Government in Karnataka has opted for new taxation measures to net additional resources of Rs. 1,829 crore while simultaneously working at maintaining fiscal discipline.

Presenting his fifth budget to the Legislative Assembly and the third in a row of the Government headed by him, Chief Minister B.S. Yeddyurappa, who holds the Finance portfolio, described the budget as growth-oriented with a 1 per cent increase in value-added tax for all commodities (from 4 per cent to 5 per cent on around 100 items and from 12.5 per cent to 13.5 per cent for all others).

The State is also gearing for the implementation of the Goods and Services Tax in the coming year.Unlike the last three budgets, which did not levy fresh taxes, this budget sees taxation measures that include an increase in the lifetime tax for all motor vehicle (two-wheelers and four-wheelers based on showroom sale price), entry tax on sugar, increase in the luxury tax on hotel rentals and a tax on tobacco products. The increase in VAT alone will fetch the Government additional revenue of over Rs. 1,400 crore.

Toll on trucks

The Government has imposed a toll of Rs. 500 on every trip made by a truck carrying a load of more than 16 tonnes (iron ore and granite). The farm sector again takes the prime place in the State Budget with the Chief Minister announcing that farmers will be eligible for loans at a subsidised interest rate of 3 per cent from nationalised and commercial banks. A new clause has however been added:

All eligible farmers should submit their loan details to the taluk officers of the Department of Cooperation and register their names by April 30. Only those who repay on time will be eligible for fresh loans. Nearly Rs. 120 crore has been set apart in the budget for the farm loan subsidy component.

The Chief Minister announced an increase in reservation of seats for women in panchayati raj institutions to 50 per cent from the existing 33 per cent.The budget presents a surplus of Rs. 500.49 crore on revenue account while the fiscal deficit is estimated at Rs. 9,708.46 crore, which is 0.15 per cent and 2.96 per cent of the Gross State Domestic Product (GSDP) respectively. There is a big increase in the State's annual plan size from Rs. 25,967 crore (revised estimates for 2009-10) to Rs. 31,000 crore (budget estimates for 2010-11).

Further, the total budget outlay has been increased to Rs. 70,063 crore, from Rs. 60,051 crore last year. With an eye on elections to the Bruhat Bangalore Mahanagara Palike, Mr. Yeddyurappa has allocated Rs. 18,872 crore over a period of three years to the BBMP.

In the coming financial year, the BBMP will spend Rs. 3,000 crore to improve city roads, pavements and construction of flyovers and underpasses. The Bangalore Development Authority will spend Rs. 1,000 crore for construction of multi-storeyed structures to park vehicles.