FINANCIAL BUDGET OF KARNATAKA DURING COVID-19

A closer analysis of Karnataka’s financial condition suggests that the state’s economy is likely to continue to deteriorate well into the next fiscal year. The state’s unstable finances will be affected by the negative fiscal and tax deficits in the coming year.

Karnataka is one of India’s most industrialized states, with a thriving Information Technology (IT) industry worth of estimated $194 billion in the current fiscal year. Karnataka is also vital to Prime Minister Narendra Modi’s plans to expand India’s economy to $5 trillion by 2025.

The state is home to some of the world’s largest businesses, but the calamity-prone state’s problems have been compounded by a gradual decline in its share of central taxes, GST compensation, and inadequate allocations for flood and drought relief.

In 2020-21, Karnataka’s GSDP shrank by 2.6 percent. With lower revenue inflows from the Centre, floods, droughts, and declining revenues from the state’s own taxes, Karnataka is reliant on higher borrowings, which could harm growth, asset production, and revenue expenditures.

COVID-19 will affect the budget, according to the Chief Minister, who also holds the finance portfolio.

The budget presented by the CM on March 8 focused on

• CM BS Yediyurappa proposed a holistic budget that prioritized the growth of all sectors and the well-being of all citizens.
  The budget included some encouraging announcements for Chikkaballpura, such as the transformation of Nandi Hills into a world-class tourist destination. The International Science Centre, which spans 200 acres and is located in Hosur village near Gowribidanur, the birthplace of Dr.H.Narasimhaiah, is a fitting homage to the great educator.
  A significant portion of the budget was allocated to the health and protection of women, as well as development work throughout the state, to which people responded positively.
• The government proposed spending Rs. 5 crores to help women entrepreneurs through the introduction of the ‘Elevate Women Entrepreneurship’ initiative.
• The government announced technical assistance for women’s small businesses, as well as plans to fund 25,000 women by 2,260 microbusinesses.
• In the fiscal year 2021-22, the state will receive a cumulative allocation of Rs.52,529 crore to stimulate economic growth.

The coronavirus pandemic has had a huge effect on India’s economic activity as well as the loss of human lives. With a few notable exceptions, almost all sectors have been negatively impacted as domestic demand and exports have significantly decreased, with some notable exceptions where strong growth has been observed. An effort is made to evaluate the effectiveness and potential solutions for a few primary industries.