Bengaluru, DHNS: Schemes, committed expenses take toll amid revenue dip, With the continued economic slowdown affecting revenue collection, Chief Minister Siddaramaiah may have to explore new avenues for resource mobilisation if he continues to offer populist, subsidy schemes in the 2016-17 fiscal year, let alone giving a boost to the much-needed infrastructure facilities.

The government appears to be grappling with the shortage of revenue as a result of sluggishness in the economy: Shortfall in own tax revenue is expected to be in the range of Rs 1,500 crore to Rs 2,000 crore in the current year. Collections from the Commercial taxes and Stamps duty and Registration fees are likely to disappoint the government – mainly on account of falling fuel prices and slump in realty sector.

If the mid-year review of State Finance 2015-16 report is any indication, Siddaramaiah, who also holds the Finance portfolio, will have to shun populism and concentrate on streamlining burgeoning expenditure in order to maintain fiscal discipline. The report had cautioned against increasing the subsidy expenditure. The government's spending on subsidies in the current year is a whopping Rs 18,454 crore. Free power supply to irrigation pumpsets and supply of palm oil and free food grain distribution under Anna Bhagya scheme are among the major subsidy programmes.

Moreover, burgeoning expenditure has been a cause for concern to the government. As many as 82% of the total revenue of the State is being spent on the committed expenditure, leaving a very limited elbow room to fund the infrastructure development.

The committed expenditure comprises salaries, pensions, subsidies, administrative expenses and devolution to local bodies. In 2014-15 financial year, for instance, Rs 89,691 crore of the total 1,08,908 revenue receipt was spent on committed expenditure. Salary and pension took a lion's share of about Rs 31,714 crore, followed by subsidy schemes with Rs 15,842 crore expenditure.

Sources in the Finance department said the mounting expenses has forced the government to review some of its expenditure proposals and prune them to fund unforeseen expenses approved by the legislature in the form of supplementary estimates in the middle of the year. The sources, however, did not disclose the expenditure proposals that were dropped.

Agri, infra need attention

Siddaramaiah needs to focus on the agriculture sector which is facing a crisis. Karnataka witnessed highest number of farmer suicides in 2015-16. At the same time, the industry sector, which is facing the heat of slowdown, has been demanding the government give a boost to the infrastructure sector. Infrastructure facilities, particularly roads in Bengaluru, are crumbling. The government has to spend a huge sum to address the problem of infrastructure inadequacy, the sources said.

Apart from these economic challenges, the Siddaramaiah government is facing the threat of waning popularity, especially after the Congress’ poor performance in the recent Assembly byelections and panchayat polls. The chief minister is, therefore, under pressure to use the budget to salvage the image of his government. Siddaramaiah appears to believe that offering populist schemes is the only way to achieve it.

His 11th budget today

Siddaramaiah is scheduled to present the State budget 2016-17 on Friday at 11.30 am in Vidhana Soudha. This will be the 11th budget of Siddaramaiah and the 4th one as chief minister.

Major subsidies

Power:?7498.00 cr
Food: 2021.70 cr
Milk:?821 cr
Cooperation:?797.30 cr
Transport:?748.47 cr
Industries: 279.46 cr
Housing:?222.95 cr