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Honourable Speaker, 1. I rise to present the budget for the year 2004-05. 2. Sir, I had the privilege of presenting five successive budgets during the years 1995 to 1999. I stand before you once again to present the first budget in my second tenure as Deputy Chief Minister and Finance Minister. I wish to express my heart felt gratitude to the people of Karnataka for having given me this opportunity to serve the state again. 3. In the recent general elections to the State legislature, the people of Karnataka have voted for a change. Yet the vote for change has resulted in a fractured verdict. For the first time in the history of Karnataka a coalition Government of Congress and Janata Dal – Secular, became inevitable. 4. The coalition Government has emerged as a symbol of victory of the secular forces and the goal of this Government is the welfare of the people. We shall strive to make this coalition Government a success and provide able, good and pro-people governance in the State over the next five years. 5. Both partners of our coalition Government had made certain commitments to the people of the State. These commitments have been translated into the Common Minimum Programme that the Government will implement over the next five years. The focus in the first year is on those programmes, which are high priority for both partners in the coalition. This budget reflects the priorities of the Common Minimum Programme. STATE OF THE ECONOMY6. Though Karnataka’s real growth has consistently been higher than that of the national average in all three major sectors during the 1990s, in the first few years of the millennium, there is clear indication of a deceleration, caused primarily by negative growth in agriculture. Three years of consecutive drought have caused a severe dent in the agrarian economy. 7. The average real GSDP growth in the second half of the nineties was about 5.2% in the primary sector, 8.6% in the secondary sector and 10% in the tertiary sector, while in the first four years of this decade, the average growth has been (-) 3.6%, 6% and 8.8% respectively. The average real growth in overall GSDP has been above 8% and 4.7% in the second half of the 1990s and in the early part of this decade respectively. 8. Inflation in Karnataka has also been lower than the national average. The drop in the inflation rate has been particularly marked in the first four years of this decade. While the average inflation rate for the period 1993-94 to 1999-2000 has been about 7%, in the period 2000-01 to 2003-04, it has been about 3.5%. 9. The outlook for the economy should thus be positive and tempered with abundant fiscal caution. It is possible to achieve and sustain a medium-term real growth average of 8% with low inflation if the agrarian economy is ring fenced against drought, there is adequate investment in irrigation infrastructure and the fiscal and development constraints of the state are addressed. THE UNION BUDGET AND THE STATE10. The Union Budget presented by the new government at the Centre has not disappointed me. However, given that people have voted for a change at the Centre as well, much more could have been done and much needs to be done. 11. I welcome the thrust given to rural infrastructure and education in the Union Budget. I am happy that the RIDF has been brought back. I expect higher allocations to Karnataka and a focus on watershed development through the RIDF. The pilot schemes on farm level drought proofing vindicate a long-standing demand of Karnataka. While the cess for education is welcome, I am a little disappointed that the existing allocation for education has not been protected. This, I hope, will not affect the Centre’s support to the mid day meal programme. 12. Service tax will be a buoyant tax for the States in the future. Therefore, but for a small exempt list and a list of services with inter-state significance, Service Tax must be transferred to states to levy and retain. I urge the Centre to consider this key demand of the states. Similarly, I urge the Centre to also enhance the share of the States in the divisible pool. 13. The announcement to reduce interest rates on block loans to 9% is a welcome relief. Plan assistance at a loan to grant ratio of 70:30 was justified at a time when 70% of the Plan was meant for capital expenditure. This situation no longer obtains. The Centre must reset this ratio to 50:50. It would also be fair for the Centre to offer full reset of interest on outstanding block loans at current market rates. 14. Another cause for justifiable concern is the large number of negotiated loans through LIC, GIC and NCDC. These agencies have failed to pass on to the States the benefit of low market rates. Some of the old loans are at 14% to 15% rates. It will be my endeavour to prevail upon the Centre to allow prepayment of these loans. STATE FINANCES – A BRIEF OVERVIEW:15. Much has changed in the State and its finances in the last five years. The challenges that faced us five years ago have given way to newer and more serious concerns. The finances of most States in India have worsened. Karnataka has been no exception. That Karnataka’s finances are brittle and under considerable stress is a truth that has to be faced squarely. Ensuring fiscal stability is no longer a catchword but an imperative for the future development of the State. 16. I wish to place before the people of Karnataka a brief overview of the State’s finances. A few basic fiscal indicators compared for the year ending 1998-99 and 2003-04 would demonstrate the extent to which the fiscal health of the State has been affected. 17. The outstanding public debt has grown from Rs. 12,465 Crore to Rs.30,188 Crore. The outstanding liabilities of special purpose vehicles have grown from Rs. 2,146 Crore to the unsustainable level of Rs. 7,082 Crore. In the future, therefore, our borrowing must be based on the principle of affordability rather than on availability. 18. Non-developmental expenditure[1] has grown from Rs. 8,280 Crore in 1998-99 to Rs. 14,700 Crore in 2003-04. The expenditure on Salaries and pensions alone increased from Rs 4,900 Crore in 1998-99 to Rs. 8,700 Crore in 2003-04, an increase of 77.6%. Non-developmental expenditure, today, pre-empts 75% of the State’s revenues leaving a mere 25% for development programmes. Unless hard decisions are taken urgently, Government will soon be doing little else but paying salaries, pensions and interest on loans. 19. Equally, developmental expenditure of the State as a percentage of total expenditure has declined from 67.6% in 1998-99 to a low of 59.7% in 2003-04. To improve the Quality of life of the poor and give impetus to growth with social justice, public investment in the core social sectors has to be enhanced. 20. This change in the State’s finances is a matter of serious concern reflected in the growing fiscal deficit, which as a percentage of GSDP has risen from 3.54% in 1998-99 to 4.26% in 2003-04. Efforts made to contain the revenue deficit have met with mixed results. Only in some years have we been able to bring down the revenue deficit. Achieving a consistent path of fiscal correction should now be targeted. 21. It is clear that several fiscally imprudent decisions including indiscriminate off-budget borrowings, uncontrolled administrative and employee costs, poorly targeted subsidies, inflated costs of large projects combined with time and cost overruns and considerable leakage of tax and non-tax revenues as well as of user charges in utilities have combined to place the development of the State at a distinct disadvantage. This disadvantage, coupled with three debilitating droughts has led to serious consequences. The quality of life has declined in Karnataka, relative to other comparable States. This decline has been much sharper in rural Karnataka. The worst affected are the vast numbers of those with low economic entitlements who are also socially disadvantaged. KARNATAKA AND THE HUMAN DEVELOPMENT INDEX:22. Among the top twelve Indian States, Karnataka has slipped from 6th place on the Human Development Index to 7th place. This trend must be reversed. Today, on most human development indices Karnataka is barely above the all India average. My Principal objective will be to create conditions over the next five years to successfully achieve the Millennium Development Goals in Karnataka as set out in the “Compact Among Nations to End Human Poverty”. 23. This task cannot be achieved in just one Budget. We must also not lose sight of the fact that four months of the year have already elapsed. My Budget proposals therefore can only cover the remaining part of the year. This, therefore, has been the constraint under which I have had to formulate this Budget. THE FISCAL PARADIGM:24. My Fiscal Policy aimed at rapid economic growth with equity includes seven key elements; 25. First, achieving a significant increase in tax and non-tax resource mobilisation. This will be done by rationalising the tax structure to make it citizen friendly and growth oriented, stepping up enforcement to prevent revenue leakage and simplifying tax administration. An action plan to enhance Non-Tax revenues through rate rationalisation, aligning user charges with service delivery costs, incentivising additional resource mobilisation and improving collection efficiency will be implemented. 26. Second, ensuring visible and sustained reduction in non-development expenditure through a combination of measures. These will include; rightsizing of Government, pension reforms, lowering administrative costs, sharper targeting of subsidies and grants in aid and reduction in interest costs through debt swaps and control over unnecessary expenditure. 27. Third, enhancing allocations on development expenditure in key social sectors particularly in Primary Education, Primary Health, Agriculture and Rural Development, Drinking Water as well as in the development and welfare of the underprivileged to improve the quality of life. We will henceforth not spread our resources thin over too many schemes. Instead we will reduce the multiplicity of schemes and move towards outcome based Programme budgeting. 28. Fourth, enforcing efficient subsidy management across sectors to ensure that the benefits of subsidies flow to the intended beneficiaries. Government will enter into a Memorandum of Understanding with each of the subsidy–receiving agencies, under which release of subsidy will be linked to their achieving agreed performance parameters. The Special Purpose vehicles with off–budget borrowings will be part of this fiscal discipline. 29. Fifth, improving the productivity of public expenditure by introducing and monitoring measurable outcomes for all programmes. Years of public expenditure in crucial sectors such as Primary Education, Primary Health, Rural Roads, Drinking Water, Power Supply and Social Welfare have produced results far below expectations. The delivery system in social sectors will be made accountable and a concurrent social audit of public expenditure will be introduced. Officers in-charge of development programmes and welfare expenditure will be held accountable for achieving outcomes commensurate with the expenditure. 30. Sixth, ensuring Fiscal Responsibility through strict adherence to the Medium Term Fiscal Plan and ensuring full compliance by all departments, of the Karnataka Fiscal Responsibility Act. 31. Seventh, strengthening institutional measures against corruption to prevent leakage of revenue on the resource side as well as in expenditure. This will include a rule based transfer system, strict enforcement of the Transparency in Public Procurement Act, full implementation of the Anti-Theft legislation in the power sector, adherence to the Right to Information Act and implementation of the Karnataka Public Financial Management and Accountability Action Plan. GROWTH WITH EQUITY:32. It has been demonstrated time and again that rapid economic growth in itself does not necessarily mean a better life for the poor. In fact, growth left to be determined by market forces, with no interventions by Government, often creates islands of prosperity 33. Through policy interventions our Government will ensure that the poor, the socially disadvantaged and the farming community are brought within the mainstream of the development process. This shift in emphasis should be aimed at transforming the agrarian economy of Karnataka to make it more productive, bring better incomes to the farmers and a better quality of life to the people of rural Karnataka. We will also give sharper focus to the development of Northern Karnataka. AGRICULTURE AND THE RURAL ECONOMY:34. Agriculture is the backbone of the Karnataka Economy. It contributes about 25% of the state’s GSDP and employs 70% of our rural population. We are also one of the leaders in agricultural diversification. We are the third largest producer of fruits and the fifth largest producer of vegetables in the Country. We have a successful model of contract farming, value addition and exports in the Gherkin Industry. 35. Despite all this no one can deny that public investment in agriculture has been low, not all farmers have been able to access credit, modern technology, irrigation and markets. Reforms have largely passed the farmer by. 36. My aim is to put agriculture on a new footing, to widen access to credit, irrigation, technology and markets, to step up both reforms and investment in agriculture and to restore the dynamism of the sector. This will require a paradigm shift from agriculture to agri business. 37. The farmer in Karnataka has the ability and the ingenuity to overcome the endemic problems in agriculture. He is also willing to work hard. However, what he lacks is access to cheap agricultural credit. Neither the commercial banking system nor the co-operative credit structure has been able to meet the credit needs of agriculture at low interest rates. 38. The co-operative credit institutions are, at present charging the farmers 12.5% for crop loans and 13.5% for long term loans. The Government is determined to change this decisively. To fulfil the commitment to the farmers of Karnataka as enunciated in the Common Minimum Programme, I propose to make available agricultural credit, through the cooperative banks, to the farmer at 6% rate of interest. I am setting apart Rs. 60 Crore for this purpose. I am confident that this radical step, which is perhaps the first in our country, will transform agricultural development in Karnataka. A programme to make this benefit available to Scheduled Castes, Scheduled Tribes, Backward classes Minorities and other weaker sections will be drawn up. 39. Our Government has also decided that the cooperative credit institutions will not henceforth charge compound interest and penal interest on crop loans. Suitable directions have been issued in this regard. 40. Over 20,000 farmers who had availed term loans have repaid as interest, amounts in excess of the principal amount borrowed by them. The dues outstanding of such farmers, who have repaid an amount equal to the principal and simple interest on the loans that they had availed, will stand waived. I have set apart Rs.49 Crore to provide this relief. 41. In addition, the previous Government had announced waiver of interest on crop loans. To meet this commitment, I am providing Rs. 83 Crore in the current year. 42. The Union Finance Minister has, in the recent budget, announced certain measures to double the agricultural credit through the banking network. As part of these measures, a Task Force is being constituted to examine the reforms required in the cooperative banking system. We will await the recommendations of this task force and the action taken by Central Government and thereafter seriously examine further relief measures such as waiver of penal interest for farmers who are burdened with debt. 43. In the current year, I am enhancing the allocation for Crop Insurance and am setting apart Rs. 241 Crore. 44. We have been fortunate that most of the State has received widespread rains, sowing operations are in progress and the targeted sowing area for most crops in most districts should be achieved. Government has taken action to supply good quality seeds to the small and marginal farmers in the State at subsidised rates at a cost of Rs. 50 Crore in the current year. 45. In order to provide relief to farmers in the event of fall in the prices of agricultural produce, the Government is committed to undertake market support operations to stabilise prices through the Price Stabilisation Fund. The corpus of the fund will be enhanced to Rs. 100 Crore. 46. A comprehensive programme for the development of dry land on watershed basis will be launched in the current year. The objective of the project will be to conserve, develop and sustain soil and water resources, enhance agricultural productivity, reclaim wastelands and to construct water-harvesting structures. I propose to set apart Rs.100 Crore for this programme. After assessing the impact of the programme, the Government will consider expanding the project next year. 47. In recent years, a number of irrigation projects have been taken up by KBJNL, KNNL, and the CNNL. These will be completed expeditiously. Priority will be given to the time-bound completion of Upper Krishna Projects by the end of next financial year so that the benefits of irrigation reach the needy farmers. I am hopeful that Government of India will step up resource support to the State under the Accelerated Irrigation Benefit Scheme. 48. The Government is aware of the requirement of the farmers of Surpur, Jewargi and Shahpur taluks of Gulbarga districts, whose lands are at higher levels between KBC/SBC and MBC commands. Keeping this in view, it is planned to take up the investigation and technical feasibility of Mallabad Lift Irrigation Scheme which has the potential of providing irrigation to 40,000 ha. I am setting apart Rs. 5 Core for the investigation work. 49. There are three World Bank financed projects, which have potentially immense benefits for Karnataka’s agriculture and the quality of life in rural areas. These include the watershed project at an estimated cost of Rs. 690 Crore; the tank management project at an estimated cost of Rs. 670 Crore and the Rural Water Supply Project at an estimated cost of Rs. 1,035 Crore. 50. The progress of these projects is extremely poor with less than 10% amount utilised over the last two years. These are projects, which benefit the rural poor, specially those farmers who depend on rain. Accelerated implementation of these projects will be given priority. 51. Every single person should have access to potable drinking water and all-weather housing. These are basic needs, and I am enhancing the allocation for Water Supply, Housing and Urban Development from Rs. 1732 Crore to Rs 1870 Crore, which is an additional allocation of Rs 138 Crore. 52. Some of the animal vaccines commonly used for protecting livestock and farm animals are since June 2002 being supplied at cost to the farmers. The reluctance of the farmers to pay for the vaccine has resulted in several animals remaining unvaccinated and affected by disease. 53. With the exception of anti rabies vaccine mainly used in dogs and the foot and mouth disease vaccine for cattle which is subsidized by Government of India, all other bacterial and viral vaccines will henceforth be supplied free of cost. 54. The Karnataka Sheep and Wool Development Corporation is engaged in sheep and goat development activities. Shortage of resources has affected the activities of the Corporation. To revitalise the Corporation, I propose to provide a one-time grant of Rs. 3 Crore during the current year. 55. To provide relief to the fishermen who use mechanised fishing boats I propose to extend waiver of sales tax on diesel supplied to mechanised fishing boats limited to 50,000 KL per year. This benefit will cost Rs. 25 Crore. 56. To give a thrust to agriculture, I am enhancing the plan outlay for agriculture substantially from Rs. 412 Crore in 2003-04 to Rs. 840 Crore in 2004-05, a growth of 104%. FOOD SECURITY:57. Insulating the poor and the under privileged population against hunger and deprivation is the foremost amongst the welfare responsibilities of the State. In recent times, we have seen the unfortunate misuse and diversion of food grains under various programmes meant for the poor. With a view to prevent such rampant misuse and to ensure better targeting and delivery of subsidized grains, immediate steps will be taken to weed out the ineligible cardholders. This process will be completed by 31st August 2004. 58. Providing those families below the poverty line with cheap food grain for their daily sustenance is a solemn commitment made by our Government. Under the public distribution system each Below Poverty Line cardholder will be provided 20 kg of rice and 5 kg of wheat at Rs.3 per kg per month,. I am sure this will in substantial measure provide sustenance to the poor in Karnataka. I am setting apart Rs.300 Crore for this programme. PRIMARY EDUCATION AND PRIMARY HEALTH:59. I have already referred to the urgent need to meet the Millennium Development Goals. Let me quote from the Human Development Report “Human development is about people, about expanding their choices to live full, creative lives with freedom and dignity ……Fundamental to expanding human choices is building human capabilities. The most basic capabilities are living a long and healthy life, being educated and having a decent standard of living”. Primary education and primary health should, therefore, be the focus of our development effort. 60. The mid-day meal programme has now gained national acceptance. Karnataka has already implemented the mid-day meal programme in Government primary schools for all children up to class five. In the current year, I propose to extend the mid-day meal scheme to cover all children up to class seven in both Government schools as well as grant-in-aid schools. In addition, I propose to enhance the conversion charges for providing a hot cooked meal from Re.1 to Rs.1.31 per child per day. I am setting apart Rs.262 Crore for this programme in the current year. This will benefit an additional twenty-five lakh school children. Under the Common Minimum Programme the State Government is committed to extend the mid-day meal scheme to all children up to class ten in a phased manner over the next five years. 61. The total plan allocation that I am making for the education sector is Rs. 860 Crore. This is a substantial increase of 61% over previous year’s allocation of Rs. 535 Crore. 62. The efficiency of Government’s spending in education needs to be improved to focus on quality of output. The reforms in education aimed at improving the quality of primary education will include; · Implementing the learning guarantee system in the entire State so that the quality of every elementary school is assessed and good schools rewarded, · Rationalisation of schools and teacher: student ratios to extend coverage to underserved areas, · Enhancing additional funding to non-salary activities, · Empowering school management committees to monitor the attendance and performance of teachers, · Reforming the grant-in-aid system to ensure better quality schooling and wider reach for the poor and disadvantaged students. · Rationalising the input cost subsidisation schemes in the education sector and canalising more funds through the maximum impact programs. 63. Public health expenditure as a percent of GSDP should reach at least 2% in any progressive society. From 1.02% of GSDP in 1999, this has fallen to 0.7% in 2004 in Karnataka. I am enhancing the Plan outlay for the health sector from Rs. 333 Crore to Rs. 377 Crore with a focus on taluka level hospitals and on improvement of medical infrastructure in Northern Karnataka. 64. A key initiative to improve and extend the primary healthcare system in Karnataka will be taken under the “Health and Nutrition Project” with the support of the World Bank. This project, estimated to cost Rs. 765 Crore would be implemented over the next five years. The focus of the programme will be to increase access to health care for the rural poor and the under-privileged, and to strengthen of primary health care with community participation. 65. The Yashaswini scheme provides certain healthcare facilities to the farmers who are members of cooperative societies. There are a large number of small and very marginal and agricultural labourers, who, not being members of cooperative societies, are not covered under Yashaswini. To meet the needs of such farmers, I propose to strengthen the corpus of the existing Medical Relief Fund to Rs. 50 Crore. Further, during the course of the year, Government will examine how a viable insurance scheme, to be called, ‘Sanjeevani’ could be evolved to cover these sections. DEVELOPMENT OF SCHEDULED CASTE, SCHEDULED TRIBES, BACKWARD CLASSES AND MINORITIES66. The Ganga Kalyana scheme, which brings economic benefits to small farmers among the Scheduled Castes and Scheduled Tribes, is provided with Rs. 13 Crore in this year. This will be in addition to the regular programme under pooled funds. 67. The allocations for disparate programs under the SCP & TSP will be pooled to the fullest extent possible to ensure additional allocations for Scheduled Caste and Scheduled Tribe Welfare. The overall plan outlay for Social Welfare will increase from Rs. 396 Crore to Rs. 435 Crore, including pooling. 68. To enhance the existing educational opportunities and to provide quality education to the children belonging to SC/ST, Backward Classes and Minorities, I propose to start 30 new residential schools. Of these 10 will be for Scheduled Caste, 10 for Backwards Classes and five each for Scheduled Tribes and Minorites. 69. To enable the members of Backward Classes to take up self employment activities by upgrading their skills to suit current market needs, under Shrama Shakthi, I propose to earmark Rs. 20 Crore. 70. A castewise survey of the Backward Castes will be taken up with Central assistance to enable better planning and targeting of welfare programs. I have earmarked Rs 2 Crore for the purpose. 71. Our approach towards development of Minorities has been fragmented. Currently, Minorities Development, Wakf, Haj, Urdu Language etc. are under different departments. I propose to bring all of these welfare measures under a single umbrella by creating a post of Secretary to Government, Minority Welfare to ensure better focus for development of Minorities. 72. I am also enhancing the allocations for the Minorities Commission and the Wakf Board to enable welfare programs to be taken up for protection of Wakf properties. 73. Recognising the need for providing adequate opportunities to the Scheduled Castes, Scheduled Tribes, Other Backward Classes and Minorities in Government procurement, I intend to extend the benefit of upto 50% purchase preference to the members of the SC/ST, BCs and Minorities in all procurements upto the value of procurement that is exempt under the KTPP Act. WOMEN AND CHILD DEVELOPMENT74. The Stree Shakthi Programme has been successful. To strengthen the newly formed self-help groups, I propose to allocate Rs. 16 Crore towards the Revolving Fund and training of these groups. 75. I am also setting apart Rs. 6 Crore for construction of Anganwadi Centres. FOCUS ON NORTH KARNATAKA76. Northern Karnataka has, on average, received only 30% of district sector non-salary expenditure and about 50% of road outlays over the last 5 years. 77. While enhancing the allocation for HKDB, I wish to emphasize the need for sustained allocational bias rather than a package approach to long-standing regional imbalance problems. Our Government is committed to the implementation of the recommendations of the High Power Committee on Regional Imbalance. The key to restore balanced development is to allocate all development expenditure on the basis of a composite development index and by giving priority to bridging the sectoral gaps in the 37 backward talukas of Northern Karnataka. We will also urge the Central Government to accord special status, under Article 371 of the Constitution, to North Karnataka. 78. To meet the long-standing demand of a High Court Bench in Northern Karnataka, I am providing Rs. 20 Crore in the current year. If need be, this allocation will be enhanced. A Science City will be promoted in Dharwad. A Food Park will be operationalised in Jewargi Taluka of Gulbarga Ditrict. In all, the share of Northern Karnataka in the total outlay would be about Rs. 7,170 Crore which is 54% of the outlay. KANNADA AND CULTURE79. Our government’s concern is to protect and develop Karnataka’s land and water resources, language and culture. To meet this objective, I propose to enhance allocation to various academies so that they can take up more activites. Similar attention will be given to our rich heritage and I propose to declare Mysore, Srirangapattana, Bidar, Bijapur, Gulbarga and Kittur as heritage centres. I have earmarked Rs. 3 Crore in the current year to enable one project each being taken up in these cities. Development of Basava Kalyan in Bidar district will also be taken up on the model of Kudala Sangama. INDUSTRY AND INFRASTRUCTURE
80.
Government has been
giving investment subsidy to encourage establishment of small scale
industries. The disbursement of this subsidy has been pending for several
years. To clear a part of this liability, Karnataka State Finance
Corporation will be authorised to raise 81. To give a boost to economic activities in potential areas, I propose to establish Airstrips at Mysore and Gulbarga and earmark an amount of Rs. Five Crore for this purpose in the current year. 82. I propose to include industrial infrastructure in the activities that could be taken under the Infrastructure Initiative Fund. I hope this will provide the required acceleration to key industrial infrastructure projects. 83. Biotechnology is a sunrise industry. While Karnataka is already emerging as a leader in this sector, we must ensure that we build a vast pool of biotechnologists. Towards this end, I propose to provide Rs. 10 Crore for the Institute of Biotechnology and Applied Bioinformatics from the Infrastructure Initiative Fund. 84. Over twenty thousand villages and about seventy four lakh passengers are served annually by the SRTCs. Upgrading public transport facilities including bus stands in Taluka headquarters, provide waiting room and wash room facilities in rural bus stands and way-side facilities for the benefit of long distance passengers in rural areas should be a priority. In order to fund this infrastructure, I propose to provide support through the Infrastructure Initiative Fund. Weavers Package85. There are 80,000 weaver families in Karnataka. I propose to extend a package of facilities to them at a cost of Rs. 20 Crore, which will include: · A suitable power subsidy to powerloom weavers who own less than 4 looms. · Providing living cum work sheds. · Extending a suitable scheme for health insurance to both handloom and powerloom weavers. · Supply of quality raw material. · Enable weavers to avail credit facilities. · Provide for skill upgradation. 86. It is necessary to harness the talent of youth and develop the human resources of our state. With this end in view, a scheme to provide for training and skill development of unemployed youth in urban and rural areas enabling them to be self-employed will be formulated and provided for. 87. Karnataka’s contribution to the Indian Defence Services has been significant, especially from Kodagu district. To encourage more of our youth and to provide education to train them to join the defence services, I propose to establish a Sainik School in Kodagu district. I am allocating Rs. 1 Crore for this purpose. TOWARDS GOOD GOVERNANCE88. High costs of public service delivery are a premium on the poor. My effort will be to fashion responsive and “responsible” governance. 89. The contours of these reform efforts are set out below: · Right sizing the bureaucracy will be top priority. Functional reviews of all departments will be completed and redeployment and VRS operationalised. Recruitment freeze will continue. · In tandem with compression of the number of ministries, a reverse merger of departments will be implemented. · A defined contribution pension scheme operated through an investible fund will be introduced on the GoI pattern. The recommendations of the committee constituted by the Reserve Bank of India on Pension Reforms will be fully implemented. · Economy in administrative expenditure will continue to be observed by all. REFORMS IN THE POWER SECTOR90. All of Government’s efforts for fiscal consolidation and to enhance allocations for core social sectors would be set to naught if the crisis of the power sector is not tackled. The losses of the power sector for the year ending 2003-04 came close to Rs. 3000 Crore. 91. The magnitude of the problem can be judged by the fact that the financial losses of the power sector, which are ultimately met by Government, are nearly as much as what the Government spends on school education in the State and three times what we spend on health or agriculture. 92. We cannot afford this level of losses. In addition to the subsidy provided in the budget, the ESCOMs and KPTCL must meet the remaining gap through efficiency and ARM measures including: · Improving collection efficiency from the current level of 85% to at least 95% in this year. I appeal to all consumers to pay their bills and avoid disconnection. · The Anti-theft Act should be enforced to eliminate commercial losses. A campaign must be launched against the theft of power and offenders subjected to severe punishment. · Enforcing strict energy audit with a view to reduce technical and commercial losses. For this purpose, all consumers will be metered. · A performance based MoU will be signed between the ESCOMs and the Government under which release of subsidy will be linked to their achieving specified performance parameters. · Supply regulation is critical to keep the fiscal burden of the power sector within affordable limits. This will be monitored and enforced. We cannot allow an un-budgeted increase in the power subsidy to crowd out other more productive expenditure. Any policy changes, which impact on the power sector subsidy claim on the budget, will henceforth have to be only with the prior approval of the Finance Minister. 93. Wide ranging power sector reforms and investment in power generation will be critical to both fiscal stability as well as meeting the growing demand for power in the State. Through all these measures, Government will ensure supply of quality power to the rural areas. CHIEF MINISTER’S ROAD FUND94. Over the last decade, we have added considerable length of new roads covering State Highways, Major District Roads, Other District Roads as well as Village Roads. This has been achieved through State funding, Central assistance, off-budget borrowings as well as externally aided projects. High order maintenance of these assets should be ensured if we are to reap the full benefits of such an extensive road network. 95. A fundamental change in our approach to road maintenance will be necessary to ensure adequate funding. I propose to convert road maintenance into a funded activity henceforth. The existing Chief Minister’s Road Fund will henceforth cover all roads in Karnataka. The road fund will be supported by the road cess, contribution from the infrastructure fund and an appropriate tolling policy. It will also be ensured that rigorous maintenance standards, transparency in its operation and appropriate merit ordering in selection of roads are provided for through suitable guidelines. ANNUAL PLAN 2004-05I have enhanced the Annual Plan Outlay from Rs. 10083.51 Crore in 2003-04 (Revised Estimates) to Rs. 12322.92 Crore in 2004-05 (Budget Estimates). The increase in Plan Size amounts to 22.2%. The major sectoral allocations are given in Annexure-I. |
