Karnataka Budget 2018: Kumaraswamy waives Rs 34k crore farm loans, but makes fuel, power costlier

05 July 2018, 06:16 PM
Karnataka Budget 2018: Kumaraswamy announces Rs 34,000 Cr crop loan waiver (ANI Photo)
Karnataka Budget 2018: Kumaraswamy announces Rs 34,000 Cr crop loan waiver (ANI Photo)

Living up to his pre-poll promises and presenting the first budget of the JDS-Congress coalition government, Karnataka Chief Minister HD Kumaraswamy on Thursday announced a Rs 34,000 crore farm loan waiver, but proposed hike in taxes on fuel and power.

The hike in taxes on petrol, diesel, power and liquor was aimed at mopping up additional revenue to offset the burden on the exchequer caused by the farm loan waiver, the chief minister, who also holds the finance portfolio, said.

“The budget reflects the stand of the coalition government, its dreams and realities, and difficulties and challenges,” the CM said in his budget speech.

Kumaraswamy, however, capped the agricultural loan to be written off at Rs 2 lakh, saying it would not be right to waive loans of higher value. All defaulted crop loans up to December 31, 2017 would be written off in the first phase.

Kumaraswamy had made a poll promise to waive off farm loans totalling Rs 53,000 crore within 24 hours of assuming office. The quantum of loans paid by every farmer, who had not defaulted on repayment, or Rs 25,000, whichever is less, will be credited to their bank accounts, he said.

According to the new budget presented, the families of government officials and those of the cooperative sector, farmers who have paid income tax for the past three years and other ineligible farm loan recipients will be out of the purview of the scheme.

Kumaraswamy, however, proposed to raise the rate of tax on petrol and diesel by Rs 1.14 and Rs 1.12 per litre respectively. The tax on electricity will also be raised from the existing 6 to 9 per cent. This move may spark off a controversy as the Congress has been critical of the Narendra Modi government over frequent hike in fuel prices.

The Kumaraswamy government budget also proposed a four per cent hike in additional excise duty on Indian Made Foreign Liquor (IMFL) across all 18 slabs, besides a raise of 50 per cent in motor vehicles tax for private service vehicles. It will be based on the floor area.

These vehicles are constructed or adapted to carry over six passengers and are ordinarily used by or on behalf of the owner for carrying people for, or in connection with, his trade or business rather than for hire. It does not include a motor vehicle use for public purpose.

The budget also proposes to raise from 10 paisa per unit to 20 paisa per unit the tax on consumption of captive energy.

The chief minister said, in order to facilitate fresh loans to farmers, clearance certificates would be issued to them after waiving the arrears of the defaulting account holders. He said Rs 6,500 crore will be earmarked for that purpose.

He, however, insisted that despite deciding to accept the “big challenge” of waiving the farm loans, his government stood committed to fiscal discipline and will ensure there was no resource crunch for development projects.

Kumaraswamy said his government will continue with all programmes launched by his predecessor Siddaramaiah of the Congress.

The budget was presented after Kumaraswamy prevailed over the Congress, whose leaders, particularly Siddaramaiah, questioned the need for full-fledged budget when all flagship schemes of the previous government were to be continued.

Siddaramaiah, who now heads the coordination committee of the ruling alliance constituents, had said recently there was no need for a fresh budget and that a supplementary budget would be enough. However, Kumaraswamy insisted that every new government should bring out a fresh budget outlining its priorities.

In his speech, Kumaraswamy termed as the “beauty of democracy” the coming together of the JD(S) and Congress and claimed in the changing political scenario at the state and national level, coalition dispensations were becoming “inevitable”.

“We have accepted the reality and inevitability of a coalition government in the state.... comprehensive development of Karnataka will be achieved by following the principles of coalition dharma,” the CM said.

(With PTI Inputs)

First Published: Thursday, July 05, 2018 12:40 PM
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