Karnataka economists laud ‘futuristic’ and ‘infra-oriented’ budget; politicians disagree

Opposition leader Siddaramaiah and JD(S) leader HD Kumaraswamy picked holes in the Union Budget and denounced it.

ByBellie Thomas

Published Feb 02, 2023 | 3:57 AMUpdated Feb 02, 2023 | 3:59 AM

Karnataka economists laud ‘futuristic’ and ‘infra-oriented’ budget; politicians disagree

In light of the 2023 Union budget presented by Union Finance Minister Nirmala Sitharaman on 1 February, South First reached out to economists and politicians in Karnataka to find out what they thought about it.

While economists in the state had much praise for Sitharaman, Karnataka’s Opposition leaders felt differently.

Reacting to the budget, Opposition leader Siddaramaiah said, “The Modi sarkar has put a ‘Naama’ for Karnataka. It looks rosy from the outside, but hollow inside. 25 useless MPs have not safeguarded the interests of Karnataka.”

Siddaramaiah added that the Modi-led government was all set to borrow ₹18 lakh crore in 2023-24, and by the end of 2023, the government’s debt would have increased to ₹173 lakh crore.

This was nowhere close to the ₹53.11 lakh crore debt when Manmohan Singh stepped down as prime minister in 2014, he noted.

Questioning Sitharaman’s fiscal deficit calculation, Siddaramaiah said, “The finance minister said that there was a revenue receipt of ₹26.32 lakh crore, out of which ₹10.80 lakh crore was spent as interest. This will be at 42 percent interest. That means if the country earns ₹100, ₹42 goes as interest. The fiscal deficit, by this calculation, will be 6.1 percent. However, the finance minister has stated that it will be 5.9 percent.”

He added: “Since it is an election year, there was an expectation that Karnataka would benefit from this budget. By defying this expectation, Nirmala Sitharaman has once again betrayed the state she was elected from.”

No assurances

Meanwhile, JD(S) leader HD Kumaraswamy said that the “double-engine government” — a phrase the BJP uses — does not guarantee the completion of the Upper Bhadra project.

“A budget of ₹5,300 crore has been announced for the Upper Bhadra project. It should be declared as a national project and implemented as soon as possible,” said Kumaraswamy, who retorted that the double-engine government has no guarantee as to when it will be completed.

He quipped, “Whatever development they announce now will be implemented in the state only after the election.”

“It has been eight years since the Narendra Modi government came to power. He had only criticised the programmes, that were announced today, in these eight years. Budget announcements remain on paper. For the last 25 years, railway projects are still in limbo. How many times will we send the applications to the Centre?” Kumaraswamy asked.

Also read: Telangana leaders criticise ‘anti-farmer, pro-corporate’ budget

Economists weigh in

Economist RS Deshpande said, “For the past six-seven years, there has been a need to change the income tax regime and it has been changed now, which is good. Fiscally, the finance minister has managed the budget very well.”

He added, “Major components of aggregate developments have been covered well. The most important of which is the sustainable green initiatives in the budget — moving away from petroleum and other polluting agents.”

Commenting on the changes in the agricultural sector, he said, “Revamping the data management for primary agriculture credit cooperative societies and setting up digital public infrastructure are going to be game-changers in the agriculture sector. And if the agricultural accelerator funds are created, the small patches of land — that poor farmers typically leave to landlords — could also be brought into the contract farming bracket.”

Another Bengaluru-based economist, Professor Charan Singh, said, “The budget is futuristic and growth-oriented. It has taken care of various sectors of the economy. It has given a thrust to tourism, which is really needed, and it has kept in mind the agriculture sector.”

Capital growth

Speaking about increased capital expenditure, Economist Govind Rao said, “In a situation where it is important to revive the economy, particularly to create a much more congenial investment climate, this budget helps to both accelerate growth and bring about macro-economic stability.”

He added: “The increase in capital expenditure by ₹7.8 trillion to ₹10 trillion, which basically takes the capital expenditure of the central government to 3.7 percent of the GDP, is a significant move. This will help in crowding in private investments.”

Rao also said: “At the same time, in spite of the escalation in the subsidies — particularly food and fertiliser subsidies — the government has been able to contain the fiscal deficit at 6.4 percent of the GDP this year and proposes to reduce it to 5.9 percent next year. So, in that sense, it will crowd in private investments, but also try to achieve macro-economic stability.”

Singh said, “I think it is unimaginable that, in a difficult year, the Central government is going for capital expenditure enhancement. And if you look at the infrastructure projects they have in mind, it is going to be having a strong multiplier effect and industries are going to benefit.”

Also Read: Kerala decries ‘stepmotherly’ attitude in Union Budget

Focus on MSMEs, health, and more

Federation of Karnataka Chambers of Commerce & Industry (FKCCI) president BV Gopal Reddy called the Union Budget “progressive, development-oriented”, and “people-friendly”.

Speaking about the credit guarantee scheme for the MSME sector, he said. “This is an old scheme, but there was a delay in it reaching the beneficiaries. This time, an additional corpus of ₹9,000 crore has been announced for the MSME credit guarantee, but we have to wait and see how fast it will reach the beneficiary.”

FKCCI former president and Central Taxes Committee advisor IS Prasad said, “The Amrit Kaal budget, which has a focus for the next 25 years on what the nation needs, is aimed towards the health sector, agriculture, sustainability, youth empowerment, financial reforms, and digital technology.”

He added, “The capital outlay of ₹10 lakh crore towards infrastructure is in line with the PM Gati Shakti project to boost the economy. The increase in the taxable limit from ₹5 lakh to ₹7 lakh is welcome. The ease of doing business by reducing compliance burdens. providing DigiLocker. and relaxing KYC norms for business entities is something to appreciate.”