Petrol, diesel, liquor to cost more in Karnataka as govt hikes tax

Petrol, diesel and liquor are set to cost more in Karnataka from April 1 as the BJP government in its 2020-21 budget on Thursday proposed to hike the taxes to mop up additional resources in the face of unprecedented "financial difficulties". Rate of tax on petrol and diesel were increased by three per cent making the fuel dearer by Rs 1.60 and Rs 1.59 per litre respectively. Presenting the budget in the assembly, Chief Minister B S Yediyurappa announced tax on petrol would be increased from 32 per cent to 35 per cent and diesel from 21 per cent to 24 per cent.

Yediyurappa, who also holds the finance portfolio, increased excise duty on Indian Made Liquor (KML) across 18 slabs by six per cent. However, to promote affordable housing, the government proposed to reduce stamp duty on first time registration of new apartments/flats costing less than Rs 20 lakh from existing five per cent to two per cent. This is the first budget of the BJP government after coming to power last year and the seventh presented by Yediyurappa.

"For the year 2020-21, a total amount of Rs 55,732 crore is provided for stimulating economic growth sector", the Chief Minister said. A new industrial policy would be implemented to attract capital investment, keeping in view the comprehensive industrial development of the state, especially for the backward areas, tier-2 and tier-3 cities. "Priority will be given to those sectors providing greater opportunities in innovative technology and employment generation", the Chief Minister said.

Rules would be framed by amending the relevant acts to encourage the investors and to enable them purchase land directly from the land owners at the place identified for the Establishment of industrial units. The government would bring out a new agricultural policy to encourage water security, land bank and mass cultivation, micro irrigation farmers, processing of farm produce, marketing and also to consider agriculture and horticulture as an industry.

Recognising the importance of Bengaluru as the key driver of state's economy, Yediyurappa mooted proposals to ease the notorious traffic congestion of the city by promoting the public transport system. "For the year 2020-21, a total amount of Rs 8,772 crore is provided for the Bengaluru development sector," he said.

A comprehensive mobility programme for Bengaluru -- half of the contribution of Karnataka gross state domestic product comes from the city alone -- is prepared for the first time, he said.

Infrastructure facilities, transit based development and essential regulatory measures will be taken up with an objective of increasing the utilisation of public transport from 48 per cent to 73 per cent, Yediyurappa said. He indicated Karnataka is facing unprecedented economic difficulties following a Rs 8,887 crore reduction in the state's share in central taxes, cut in allocation under 15th finance commission and a Rs 3,000 crore hit in GST compensation.

Karnataka's share in central taxes has come down by Rs 8,887 crore in 2019-20 as per the revised budget estimates of the central government. Apart from this, Rs 3,000 crore GST compensation will also be reduced as collection from the GST compensation cess is not as expected, the Chief Minister said. "With all this it has become difficult to reach the 2019 -20 budget targets and to manage this situation within the bounds of the Karnataka Fiscal Responsibility Act, an inevitable situation has arisen this year to cut down the expenditure of many departments," he added.

As per the interim report submitted by the 15th finance commission, there is a reduction in the state's share of central taxes to 3.64 per cent compared to 4.71 per cent fixed by the 14th finance commission. In view of this, there will be a reduction of Rs 11,215 crore in the state's share of central taxes in 2020-21 budget, when compared to the previous year. "This magnitude of economic difficulties was never faced in the previous years by our state," he added. Despite financial stress, the Chief Minister tried to focus on agriculture and irrigation in the budget, proposing to allocate Rs 500 crore to take up the works of Kalasa and Banduri Nalas under the Mahadayi river Project.

He also proposed to waive the interest on default agricultural loans given for the purchase of farm equipment by cooperative banks, benefiting about 92,000 farmers. The Chief Minister said, the state government is committed to the "speedy continuation" of the much anticipated Mahadayi Project, which is very helpful for the people and farmers of North Karnataka region.

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