Under pressure to fulfill 5 guarantees, Karnataka government ropes in BCG as consultant: Report

Under pressure to fulfill the five guarantees, the Siddaramaiah-led Karnataka government has roped in Boston Consulting Group (BCG) as a consultant. The BCG has been tasked to come up with strategies to boost revenue and plug leakages in revenue collections. The five guarantees, promised by the Congress during assembly elections, cost the exchequer Rs 36,000 crore in 2023-24. 

This year, Chief Minister Siddaramaiah has allocated around Rs 52,000 crore for the five schemes, which benefit roughly 5.10 crore people. BCG in its report suggested that the government should focus on identifying new sources of revenue in departments such as mining and asset monetisation, Moneycontrol reported citing sources. 

Karnataka government's five guarantees

The five guarantees promised by the Congress in Karnataka are Gruha Lakshmi (Rs 2,000 to every woman head of a family), Gruha Jyoti (200 units electricity free to every household), Shakthi (free travel for women across Karnataka in state buses), Anna Bhagya (10 kg rice to every member of BPL families every month) and Yuva Nidhi (Rs 3,000 dole to unemployed graduates and Rs 1,500 to unemployed diploma holders for 2 years in the 18-25 age group). 

BCG's suggestions

One of its many suggestions is to monetise around 25,000 acres of land near Bengaluru. The Karnataka government is mulling setting up planned satellite towns in and around Bengaluru as well as in Bidadi, Anekal, Hoskote, Devanahalli, and Doddaballapur, a source told the news outlet. 

"When we create infrastructure, housing, industrial layouts, and IT corridors, then it will increase the value of land and some amount of land can be monetised to raise funds for development," the source added.

He further said that improved expenditure management in departments like irrigation, energy, Public Works Department, Rural Development and Panchayati Raj Department is being explored. The state government is also exploring the possibility of raising funds through innovative methods. 

If these suggestions are implemented, the state government is hoping to raise an additional Rs 5,000 crore per fiscal. Additional chief secretary (finance) LK Atheeq said more compliance in GST and property tax will also help in generating more revenue. 

Karnataka government hikes fuel rates

The development came days after the state government announced an incresae in the cess on petrol and diesel, leading to an increase in fuel prices. Effective from June 15, the government raised Karnataka Sales Tax (KST) on petrol from 25.92 per cent to 29.84 per cent and from 14.3 per cent to 18.4 per cent on diesel. 

With this, petrol and diesel prices are likely to increase by around Rs 3 and Rs 3.05 in the state, as per Petroleum Dealers Association. Defending the hike in fuel prices, State Minister for Commerce and Industries MB Patil reportedly said, "We need money for Guarantees and development, hence there has been an increase in fuel price." He added that the increase in fuel prices, petrol and diesel rates in Karnataka, however, remain lower than in other states.