Bengaluru: The spike in Covid-19 cases and the extended lockdown has put restrictions on the festive spirit in the state. There has been no shopping across the state as most business establishments are shut down due to curfew. Also, people are staying indoors due to restrictions.
Karnataka had imposed curfew in some districts on April 27. However, as the cases increased at an alarming rate, the state declared a stringent lockdown from May 10. But, it is facing high revenue losses due to subdued economic activity.
Ramzan, Akshaya Tritiya and Basava Jayanti that fell on Thursday and Friday are the three important festivals. This time, the festive mood was missing as people were seen spending money on necessities rather than on luxuries.
Festivals like Ramzan and Akshaya Tritiya boost the economy as people spend a generous amount of money on both occasions. They purchase gold, vehicles and other expensive gadgets during Akshaya Tritiya. Likewise, Muslims spend a lot of money on clothes and food during Ramzan.
The lockdown has suppressed the festive mood and people are unable to spend money on festivals. This is the second time when such a situation has arisen which has pushed the business community into a state of despair.
“In pre-Covid times, around Rs 500 to Rs 600 crore worth gold was usually sold on Akshaya Tritiya day. But this time, there has hardly been any business”, said TA Shravan, JD(S) MLC and president of the Karnataka State Jewellery Merchants Association. There used to be a huge sale of vehicles, gold and household items during this season which has now been dampened due to the pandemic. Vehicle showrooms are also closed as are malls and others stores.
” The state government stands to lose around Rs 5,000 crore in revenue if the lockdown is extended will the end of this month. Major revenue sources like commercial tax (GST), motor vehicle tax and stamps and registration have suffered a huge slump”, said a senior official from the finance department. Liquor shops are permitted to open for only four hours a day and so, revenue from excise too is not ample.
The state’s economy decreased to 2.6% in the last fiscal and it is expected to get worse this year. Karnataka’s borrowings in 2021-22 are estimated to be Rs 71, 332 crore which is around 33% higher than the period before the pandemic. Additional borrowings were necessary as the year 2020-21 witnessed a decline of 11% in revenue receipts. This has pushed up the fiscal deficit from a manageable 2.5% of GSDP to 3.2%.
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