Yeddyurappa to prasent budget---

When Chief Minister B S Yeddyurappa walks into the Assembly to present a fifth successive Budget on Friday, he will be the first person to admit that Budget 2010-11 exercise proved to be more difficult than the previous four.

At a time when the global recession is yet to fade out, and with the position of public finances in the doldrums, Yeddyurappa has the twin task of balancing a healthy fiscal position without burdening the common man, besides ensuring that there was no deviation from the populism that had been a hallmark of his Budgets.

With elections to the Bruhat Bengaluru Mahanagara Palike (BBMP) likely to be held later this month and polls to Gram Panchayats slated in the next few months, the CM in the Budget is likely to give a thrust on a special package for Bangalore, besides a larger stress on rural development.

Though the economy is looking brighter this year compared to the previous year, the global economic scenario is likely to have another shake up in the coming months due to a possible business mortgage crisis in the US.

In such a scenario, Yeddyurappa has to do a tightrope walk when he presents Budget 2010-11. With an expected shortage of revenue mobilisation by around Rs 5,555 crore (as per the Karnataka midterm fiscal report) sure to go up further due to poor tax realisation in Commercial Tax department and Stamps and Registration, motor vehicles and money not realised through sale of government land and an anticipated economic shakeup, the availability of resources is likely to be restricted.

The only solace for the government this year could be an increased tax collection in the next fiscal due to the rising inflation. But it alone is unlikely to come to the CM’s rescue as he plans mega sops for rural Karnataka and ensure that the BJP also lives up to its pro-urban image. As a result, he has no other alternative than finding new means of revenue mobilisation by slapping cess and other indirect taxes.

Yeddyurappa, in fact, has already hinted that there was no other option before him than slapping new taxes on those “who could afford,’’ while promising not to burden the lower income groups.

The biggest challenge for the CM, though, is how and from where the government raises the resources, considering political compulsions might restrict him in slapping cess in certain sectors, besides maintaining a healthy fiscal deficit as per the Fiscal Responsibility Act which also puts a ceiling on borrowing market funds.