Karnataka CM Siddaramaiah gives capital boost for urban infrastructure upgrade

BENGALURU: CM Siddaramaiah's first two budgets, after his comprehensive win in the 2023 election, were weighed down by the social welfare programmes Congress had promised in the run-up to the election. The expenditures that the "five guarantees" entailed meant there was little left over for development works - a big reason why urban dwellers, including Bengaluru residents, have been at their wits' end with the sorry state of infrastructure.

That could now change a little. The welfare expenditures have stabilised and there's good revenue growth. So, in his latest budget, presented on Friday in an over 3-hour-long speech, Siddaramaiah has stepped up capital expenditure by 30%, compared to just 2% last year.
Within capital expenditure, the two biggest increases are in public works (187%), and urban development (173%). There's a 56% decline in revenue expenditure for urban development, but despite that, there's still a 34% increase in allocation for urban development. Hopefully, this means better roads & drains. There's also an over 90% increase in allocation for road transport.
Additional allocations, thanks to growth in revenue mop-up
Special emphasis has been placed on urban development projects to provide adequate basic infrastructure and quality services to citizens in the rapidly growing cities of the state," Siddaramaiah said in his budget speech. He made a specific mention of Bengaluru later, saying that the yearly grant of Rs 3,000 crore being provided to the city will be enhanced to Rs 7,000 crore in the coming year. He also said a new special purpose vehicle will be established "to utilise these grants and implement major developmental works on priority".
Growth in govt revenue (10% in the ongoing fiscal) has played a big part in giving the CM the confidence to make these additional allocations. He has assumed a 13.5% growth in revenue for the coming fiscal. Given the global economic slowdown, it remains to be seen if that can be achieved. But Karnataka, for now, is doing very well. It is the second highest GST revenue-collecting state in the country.
Despite higher capital allocations, Siddaramaiah has managed to keep fiscal deficit at 2.9% of state GDP, just below the limit mandated under the Karnataka Fiscal Responsibility Act. But with rising debt and interest payments are soaring - it rose by 19% in the current fiscal and is estimated to rise by 24%, to Rs 45,600 crore, in the next.