There are two Karnatakas, says 15th FC Chairman N K Singh

Bengaluru: There are two Karnatakas, one was prosperous and the other one far less prosperous, said 15th Finance Commission Chairman N K Singh at the meeting yesterday. He also raised concern about the rising debt to GDP ratio in the State.

The State is considered as India’s engine of growth as it is home to technology and startup industries. But the poverty numbers are very high in Karnataka (poverty rate in Karnataka stood at 21 per cent), even though the per capita income is higher than that of the nation. This showed how intra-state disparities could mask the overall performance, said Singh.

He further noted Karnataka preceded the central government in enactment of the Fiscal Responsibility Management Act and it also had an exceedingly credible record of conforming to all important macro-economic parameters.

For the last two days, the commission held discussions with all stakeholders, panchayat institutions, urban local bodies, all political parties members. The officials also interacted with Chief Minister H D Kumaraswamy and government officials.

Karnataka had asked for special grants amounting to Rs 1,42,260 crore and also sought special funding for Bengaluru as the city plays an important role in employment generation for the country, said a report.

A press release quoted in PTI said, the State responded positively to concerns of a commission member that debt to GDP was rising and it would have to be ‘mindful’ of remaining aligned with the broad trajectory. In 2018-19, per capita NSDP of Karnataka was Rs 2,07,062 against per capita income of Rs 1,26,406 for India, adding the State had the fourth lowest debt to GSDP ratio of 18.3 per cent in 2016-17 among all 29 states.

Karnataka has made credible progress with respect to most of the parameters of the sustainable development goals. However, education outcome and anemia in children were to be focused on, said the release.

In the last 10 years, State faced eight years of drought, said Singh, adding that the resources it received in the last finance commission (NDRF and SRDF) was less than what it deserved. This needs to be looked into. There is a need to improve irrigation to complete many irrigation projects and improve agriculture production.

Meanwhile, Chief Minister told the Commission that injustice has been done to Karnataka with regards to State and National Disaster Relief Fund allocation and this needs to be increased. The point of much deeper rationalization of centrally sponsored schemes was also brought up by the CM.

“Karnataka believes that sharing with respect to centrally sponsored schemes following the 14th Finance Commission’s award put an onerous burden on it and mitigates to a large extent, benefits of higher devolution of funds,” said Singh.

The CM said the Commission should ensure that once the sharing formula is decided, the Central government should not reduce the funding under centrally sponsored schemes, both in terms of size and sharing pattern between Centre and State. On off budget borrowings, the release said it increased from Rs 1,853.62 crore in 2011-12 to Rs 13,173.44 crore in 2017-18.

Off-budget borrowings as a percentage of outstanding debt rose from 1.80 per cent in 2011-12 to 5.65 per cent in 2017-18. In 2018-19, GST revenue shortfall was Rs 12,407.75 crore as compared to the protected revenue, which is more than 23 per cent shortfall, it added. The Commission sought clarification from the state as whether they have a long term financially sustainable strategy to overcome agricultural distress and promote agricultural development in the State.

NT Bureau