Budget passed, VAT rates up

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The Jagadish Shettar government passed its first test on Friday with the Assembly approving the state budget by a voice vote.

The vote was preceded by high drama with the Opposition Congress and JD(S) vociferously opposing the government’s move to raise VAT by 0.5 per cent which is expected to bring an additional Rs 1,000 crore to the treasury but could prove to be a big burden for traders and the common man.

The government intends to met the resource crunch following the waiver granted to farmers for loans obtained by them from September 1, 2011 to June 30, 2012.

Opposition leader Siddaramaiah objected to this saying the government should have included those who have repaid their loans too, under the waiver scheme. According to Mr Shettar, the government’s move which comes with hardly 10 months left for the Assembly polls, will benefit 16 lakh farmers and cost the state exchequer Rs 3,500 crore.

“We expect to mobilize Rs 1,000 crore by hiking VAT rates. I seek the cooperation of opposition leaders in convincing the Centre to allocate Rs 2,000 crore for the purpose,’’ he said.

The government also doled out relief to woven plastic textile industries, which manufacture plastic nets by waiving the 5% VAT on them. ``The industry in neighbouring states do not have VAT so our units are struggling to compete with them. The government will lose only Rs 2 crore with this waiver,’’ Mr Shettar said.

Painting a rosy picture of state finances, the CM said revenue mobilization had gone up by 22% while the budgetary deficit was only 2.7 per cent. He spoke about the pro-people measures of the BJP government and said road length in villages would be increased form the existing 20 km per village to 30 km. The government will also consider accepting the A.T. Ramaswamy report and Balasubrahmanya report on land grabbing and initiate steps to auction the seized land.

Mr Siddaramaiah said the government had not taken the suggestions made the opposition on loans for farmers.

Later the Opposition staged a dharna in the House protesting against the approval of supplementary estimates worth Rs 3,500 cr in their absence. The dharna was withdrawn after the Opposition was shown a CD on House proceedings by the Speaker’s office.