Karnataka’s Chief Minister BS Yediyurappa said on Monday that the state budget had never been formulated in such a difficult situation before, warning of the challenges ahead in 2021-2022.

“Our government faced many challenges in 2020-2021. While there are clear indications of a resumption of green coverage, the year 2021-22 can also bring various kinds of challenges. year, ”Yediyurappa said.

Presenting the budget, he similarly said, the responsibilities taken to manage Covid-19 will have their own consequence in 2021-2022.

This made the budget preparation process very difficult. The central government has authorized states to obtain a loan of up to 4% from the GSDP in 2021-2022, the chief minister said.

Accordingly, a bill will be introduced in this legislative session to amend the 2002 Karnataka Fiscal Responsibility Law.

The state budget has never been formulated in such a difficult situation before. Despite this, I present this budget with positive thoughts with the aim of making the dreams of development come true, ” he added.

Yediyurappa, who also holds the finance portfolio, today presented the state budget, its eighth, to the assembly.

Noting that the state’s fiscal resources include the state’s own taxes, non-tax revenue, the share of central taxes and central subsidies, Yediyurappa said, state and central government tax revenues are lower than budget estimates due to the complete shutdown of economic activities due to containment induced by COVID.

As a result, the state’s share in central taxes fell to Rs 20,053 crore in revised estimates from budget estimates of Rs 28,591 crore in 2020-2021, he said.

For all these reasons, it has become difficult for the state’s fiscal resources to meet the 2020-2021 targets, he said.

He pointed out that the central government had declared in its 2021-2022 budget that the share of central taxes to be provided to the state would be Rs 24,273 crore.

Further noting that due to Covid-19 there had been a drop in the state’s GST collection, Yediyurappa said the central government had to pay this loss as compensation for the GST.

Since the collection of the GST compensation tax was not as expected, she informed that she would take out a loan and allocate it to the states and that the loan repayment would be through the collection of the compensation tax, the chief minister said.

In 2020-2021, the Center said a loan of Rs 12,407 crore would be taken out and paid to the state as GST compensation, he said.

The central government has made it easier for states to obtain a loan of up to five percent from the GSDP in 2020-21 to deal with the economic crisis due to Covid-19, he said.

Accordingly, to benefit from this facility, Karnataka made an amendment to the 2002 Karnataka Fiscal Responsibility Law and, bearing in mind the negative impact on state finances, borrowing from the current year were limited to four percent of the GSDP.

According to the 15th report of the Finance Commission for the period 2021-2026, the state will collect a tax share of 3.64%, Yediyurappa said.

The Commission gave the state Rs 3,548 crore for local agencies, Rs 791 crore to the National Disaster Relief Fund and Rs 1,631 crore for the Income Deficit Grant in its report for 2021-2022.

In addition to this, the Commission recommended Rs 3,000 crore for the ring road of the city of Bengaluru and Rs 3,000 crore for the full development of reservoirs and other water resources in the state, he said.

The government will strive to secure the subsidies recommended by the 15th Finance Committee, the chief minister said PTI KSU RS BN BN

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