Chief minister D V Sadananda Gowda on Wednesday presented a surplus budget for fiscal 2012-13, with a reduction in the rate of value added tax (VAT) on several products consumed by the common man. At the same time, he has raised the additional excise duty on Indian made liquor and tobacco products. As a result of the proposed tax reliefs and enhancements, the government is likely to forego revenues of Rs 150 crore per year.
Sadananda Gowda, who also holds the finance portfolio, projected a revenue surplus of Rs 931 crore for 2012-13, which is a drop of 27.2 per cent over the budget estimates of the present fiscal (2011-12). Fiscal deficit is expected to be Rs 15,312 crore which is 2.94 per cent of the GSDP. The total liabilities of Rs 1,14,744 crore at the end of 2012-13 are estimated to be 22.03 per cent of GSDP. These three fiscal parameters are within the mandate of the Karnataka Fiscal Responsibility Act, he said.
The chief minister, who presented his maiden budget and what could be the last budget of the first BJP government in Karnataka, said, While preparing the Budget, I have kept in mind the four objectives of growth, inclusion, good governance and taxation measures as tools for development. For the first time in the history of the state, the overall size of the Budget has crossed the Rs 1 lakh crore mark to touch Rs 1,02,742 crore, which is 20.42 per cent higher than that in the present fiscal. The State Plan size has gone up 10.4 per cent to Rs 42,030 crore. The total receipts are estimated at Rs 1,03,369 crore with revenue receipts of Rs 81,461 crore and capital receipts of Rs 21,908 crore. The total expenditure is estimated at Rs 1,02,742 crore comprising revenue outgo of Rs 80,530 crore and capital expenditure of Rs 22,212 crore.
Emulating his predecessor B S Yeddyurappa who presented the agriculture budget separately, Gowda also presented the agriculture budget separately. The total agriculture budget size is fixed at Rs 19,660 crore, a growth of 10.09 per cent more than 2011-12. Despite the global and national challenges, I propose through this Budget to not only achieve a good growth but an inclusive growth. We will achieve this through various interventions. The government budgetary outlay is not adequate for the gigantic tasks at hand. We also need to leverage private capital in the form of PPP. We have made some progress in this form of investment, Gowda told legislators in his Budget speech.
He has proposed to reduce the sales tax on diesel to 16.75 per cent from 18 per cent and a drastic reduction in sales tax on high speed diesel sold to foreign-going vessels from 18 per cent to 1 per cent. I propose to levy a 5 per cent value added tax (VAT) on beedies and increase it by 2 per cent on tobacco products to 17 per cent from 15 per cent. But VAT on ready-to-cook chapathi and paratha will be reduced by 9 per cent to 5 per cent from 14 per cent, Gowda said.
Though the collection from excise duty for this fiscal (2011-12) is expected to surpass the departments target of Rs 9,200 crore by Rs 300 crore to Rs 9,500 crore, Gowda sought to increase the additional excise duty on Indian made liquor (IML) like beer and low-alcohol beverage by 7.5 per cent to 10 per cent across 17 slabs.
With effective enforcement, we expect a volume growth of 7 per cent in liquor sales across the state in the new fiscal to achieve a revenue target of Rs 10,775 crore, Gowda said.
Drinking fruit wine, however, will be cheaper as the budget proposes to reduce the additional excise duty on the brew by a whopping 50 per cent to promote its consumption.
Sparing paddy, rice, wheat, pulses and their products from VAT in the next fiscal too, the budget proposes to reduce VAT on dry chillies by 3 per cent to 2 per cent from 5 per cent. Similarly, VAT on unginned raw cotton will be reduced by 3 per cent to 2 per cent from 5 per cent and on surgical footwear and black boards by 9 per cent to 5 per cent, from 14 per cent, while braille watches will be fully exempted from VAT, he said.
As part of resource mobilisation, the budget proposes to levy a 10 per cent tax on luxuries provided on structures (decorations) in marriage halls, seminar halls, conventional halls and others.
Partnership firms will continue to be exempted from agricultural income tax in the ensuing fiscal too.
Encouraged by higher revenues from stamp duty and registration fee on sale or purchase of land and buildings for residential and commercial purposes this fiscal, the chief minister has decided to marginally reduce stamp duty to 5 per cent from 6 per cent on conveyances and sale deeds. As a result of the reduction, the state will lose Rs 500 crore, which will be compensated with the rise in excise duty.
However, the government will lose revenues of Rs 230 crore by way of reduction in sales tax on diesel while earning Rs 80 crore by way of increase in tax on tobacco products and motor vehicle tax, Ajay Seth, Secretary, department of finance explained.