Karnataka budget high on taxes
Karnataka chief minister B.S. Yediyurappa, who also holds the finance portfolio in the state government, on Thursday presented a constrained budget of nearly ₹2.38 trillion with barely any intervention to revive falling economic growth.

The state budget, presented amid political uncertainty and reduced fund inflows from the Centre, painted a gloomy economic picture. It registered an increase of ₹11,268 crore or 4.92% compared to the revised estimates of about ₹2.26 trillion of the budget presented by the previous coalition government last fiscal.

The marginal budgetary allocations, which are a result of the prevalent fund crunch, are likely to trigger a downward slide in fortunes for one of India’s best performing states, which has already witnessed a degrowth in gross state domestic product (GSDP) from 7.8% in 2018-19 to 6.8% in 2019-20.

A further slide in Karnataka’s GSDP is likely to weigh on national growth and the country’s uphill climb to beat sluggish economic conditions and the slowdown as the state is one of the biggest contributors to the Centre’s coffers.

“As you know there is a slowdown in the entire country and there has been an impact on Karnataka as well," said Yediyurappa, while presenting his seventh budget.

The chief minister now aims to raise taxes on petroleum products and also increase excise and motor vehicle taxes. However, this could further hurt the rural economy, which is reeling under a prolonged lull in agricultural activity and is still to recover from last year’s floods.

Yediyurappa’s troubles have been exacerbated by the shortage of funds that has stymied efforts to stimulate growth in the state. The Bharatiya Janata Party (BJP) leader’s problems have been growing as a section within the party has intensified its demand to replace the 77-year-old chief minister. This comes amid reports of a widening rift between Yediyurappa and Prime Minister Narendra Modi and the central party leadership led by Union home minister Amit Shah.

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