Editorial 1 : Numbers up close
Introduction: In 2020-21, the first year of the pandemic, the central government’s fiscal deficit had surged to a staggering 9.2 per cent of GDP. Since then, Finance Minister Nirmala Sitharaman has been steadfast in her commitment to fiscal consolidation, while at the same time, managing to ramp up allocations for capital expenditure.
The fiscal consolidation since FY2021
- By 2023-24, Sitharaman had managed to bring down the deficit to 5.6 per cent.
- In the latest budget, she has continued on that path, targeting a further reduction to 4.9 per cent this year, and restating her intent to bring it below 4.5 per cent by 2025-26.
- However, last year, the Union Budget was conservative in its revenue assessment — actual collections exceeded expectations by around Rs 1 lakh crore.
- This year, too, the assumptions underpinning the budget numbers appear to be restrained.
The tax and non-tax revenue of government
- The budget has pegged gross taxes to grow at 10.8 per cent.
- This is in line with the 10.5 per cent nominal GDP growth it has assumed.
- But, this implies a tax buoyancy of one, which is considerably lower than what was witnessed last year.
- Under the broad rubric of gross taxes, the budget has projected direct taxes to grow at a faster pace than indirect taxes, and within direct taxes, personal income taxes to outpace corporate taxes.
- In fact, collections from personal income taxes, which were earlier lower than corporate taxes, are now considerably higher.
- Alongside, the government’s non-tax revenue is up, driven by a higher transfer from the RBI and receipts from other communication services.
- The latter includes licence fees for telcos and spectrum-usage charges.
- Tax devolution to states works out to around 32.5 per cent of gross tax collections as a sizeable share of revenue flows through the levy of cesses and surcharges.
The expenditure side of budget is a mixed bag
- On the expenditure side, the budget has pegged the Centre’s spending to grow at 8.5 per cent this year, less than the growth assumed for the year.
- However, capital spending is expected to continue to outpace revenue expenditure, indicating the policy inclination of the government.
- The capex to GDP ratio has been maintained at 3.4 per cent, with the Ministry of Road Transport and Highways and Railways garnering a sizable share of the allocations.
- Alongside, the government’s subsidy bill on food, fertiliser, petroleum and others is expected to decline further to 1.31 per cent of GDP this year, from 1.49 per cent last year.
- Allocations towards subsidies had peaked at 3.82 per cent in 2020-21.
Budget should have provided medium term fiscal consolidation roadmap also
- The medium-term fiscal policy cum fiscal policy strategy statement accompanying the budget has not provided the rolling targets for the next two years as was the practice in the past.
- While the budget does state that from 2026-27 it will try to keep the fiscal deficit at levels that ensure that government debt is on a declining path, it should provide greater clarity.
Conclusion: Assumptions underpinning budget math appear reasonable. Greater clarity is needed on medium-term debt-deficit trajectory.
Editorial 2 : The thinning of Kannada
Introduction: A farmer in traditional dhoti was denied entry to a mall, sparking controversy about discrimination and unpaid taxes by the mall.
The Karnataka government’s reservation in private sector
- Meanwhile, the government’s attempt to make the “local” more visible in the realm of work has also exploded.
- The Karnataka government’s recent decision to draft a bill reserving jobs in the private sector for locals (to fulfil an election promise) has sent great shivers down the spines of industry heads, educational entrepreneurs, and real estate barons, who all fear an immediate plunge of their economic fortunes should such a “restrictive” policy come into place.
- The cat among the pigeons was the proposed Karnataka State Employment of Local Candidates in the Industries, Factories, and Other Establishments Bill, 2024, which will mandate 70 per cent of non-management jobs and 50 per cent of management jobs to those who are “locals”.
Who will be called locals?
- This requires the “local candidate” to have been a domicile in Karnataka for a period of 15 years.
- There are those from other states who have been domiciled in Karnataka for up to three generations.
- The part of the bill that caused the explosion insists that “migrants” to Karnataka learn the local language.
Bengaluru’s ignorance of local language
- For long, Karnataka and especially Bengaluru, the “Dubai of India”, has been considered a “cosmopolitan” place.
- This merely means that people who have lived here for decades have no obligation to wrap their heads around the local language.
- Karnataka must be the only state in India where journalists, writers, artists, filmmakers, techies, and scientists can operate and hold jobs without any knowledge of the regional language.
The ignorance of Kannada language is widespread
1. The learning of local language is considered unworthy in many sectors
- First, speaking, reading, and writing Kannada are considered skills that are not worth acquiring.
- Those who flock to Karnataka for work or education have gone to court, fought it out in editorials, or simply insisted that they need not learn Kannada; instead, they demand that the people of Karnataka respond to their needs in English, Hindi and Anything But Kannada (in many schools, the preferred language is French).
2. Assumptions that local Kannadigas are unskilled
- For all those who are airing their views on the more important role the state should play in skilling/reskilling locals, the unwritten assumption is that it cannot be in the Kannada language.
- If the Kannadiga has not made the cut, it is because she is unskilled in the language capitalism had already made its own, namely English.
3. The learning of Kannada is being ignored in schools also
- Kannada’s beleaguered existence has furrowed the brows of every government.
- It enjoys neither official hegemony nor a robust cultural presence.
- Despite its long lineage, (since the sixth century at least), its long list of Jnanpith awardees (as testimony to its literary brilliance) it remains in the shadow of English, and increasingly, Hindi.
- No wonder Kannada’s latest skirmish with capitalism was over nameboards in the state capital.
- It is a language that relies on the state to propel its existence, as large numbers desert Kannada-medium schools for the preposterous privately-run hoax that passes in the name of English medium schools.
The plight of Kannada language must worry all the stakeholders
- This extraordinary thinning of language (all languages) is something that should worry those who are worried about real estate, profits, and quick returns on investments.
- It should worry the state, if its efforts to promote Kannada learning have not succeeded despite establishing a Kannada Development Authority, periodically passing rules regarding the teaching of Kannada in schools and colleges, and supporting billboards in Kannada.
- It should equally worry those speaking in the name of the economy since the “functional” English among those who staff the vast economic machine is by no means a cultural achievement.
Conclusion: Karnataka can develop a cosmopolitan society with emphasis on local language. It requires reorienting the desire of the people. Karnataka still has the chance to build a robust bilingual policy, which will enable the local to participate, not only in the economy but as an equal partner in a culture of self-respect, civility and self-worth.