Fuel Price to billboard law: Opposition intensifies stir against Karnataka government
Karnataka has been gripped by protests led by the Opposition Bharatiya Janata Party (BJP), demanding a rollback of the recent fuel price hike.
Karnataka has been gripped by protests led by the Opposition Bharatiya Janata Party (BJP), demanding a rollback of the recent fuel price hike. The Congress party, currently in power, has defended the move, citing the state’s relatively low fuel prices. Similarly, the Karnataka government has controversially decided to change the laws regarding billboards, allowing more of them to come up in Bengaluru.
These are some of the several measures the government has implemented or proposed to bolster its finances.
Following the state assembly elections last year, deputy chief minister DK Shivakumar initially halted development fund requests from MLAs due to financial constraints. With pressure building on the government to address the funding issues for various guarantee schemes, the government has resorted to increasing fuel prices, reinstating billboards, approving new mining licenses, and raising property registration taxes. Moreover, they have engaged the Boston Consulting Group (BCG) to optimise revenue management.
The five guarantees promised by the Congress in Karnataka are Gruha Lakshmi ( ₹2,000 to every woman head of a family), Gruha Jyoti (200 units of electricity free to every household), Shakthi (free travel for women across Karnataka in state buses), Anna Bhagya (10kg rice to every member of BPL families every month) and Yuva Nidhi ( ₹3,000 doled out to unemployed graduates and ₹1,500 to unemployed diploma holders for 2 years in the 18-25 age group).
This year, chief minister Siddaramaiah has allocated around ₹52,000 crore for the five schemes, which benefit roughly 51 million people.
The government’s partnership with BCG aims to mobilise between ₹50,000 crore and ₹60,000 crore annually to fulfil electoral promises and fund essential projects. The consultancy will work closely with the state’s finance department over a month-long period under a contract worth approximately ₹9.5 crore. BCG in its report suggested that the government should focus on identifying new sources of revenue
The decision has found criticism within the party with Congress leader Praveen Chakravarty openly calling out the decision to hire BCG. Chakravarty’s statement, “If one wins elections by outsourcing core political functions to external fee-charging transactional consultants, then one also governs by outsourcing core policy functions to similar consultants.”
The Congress leader later apologised, clarifying that his remarks were academic and not intended as a personal attack on his party’s leadership. However, the statement has given ammunition to the Opposition. Leader of the Opposition R Ashoka has questioned the appointment of BCG, which he said is at taxpayers’ expense.
“What is the need of the BCG when a self-proclaimed economist like Siddaramaiah is the CM?” Ashoka said. “Not sure whether it will boost the revenues of the state government, but it will boost the revenues of private consultancy firm (sic) at the cost of Karnataka’s taxpayers,” he added.
BJP state president BY Vijayendra slammed the Congress government for the “outrageous” move to hire a “foreign” consultant. “This is akin to handing over the reins to the East India Company.” he said. “When the state government operates under the directions of an external agency, the welfare of the people takes a back seat, and innocent citizens are the ones who suffer,” Vijayendra said.
During the past month, the government has taken several decisions in line with this move to raise more revenue. Siddaramaiah has been actively reviewing the revenue collection efforts of various departments. In a meeting held on June 12, he warned officials to meet tax collection targets or face consequences. The revision of guidance value and reforms in administration are expected to generate more taxes. In 2023-24, ₹20,287 crore was collected as against a target of ₹20,000 crore.
At the meeting with mines and geology department officials, he told them to take up auctioning of mining sites which is due. The CM also directed them to increase their revenue collection and to work along with the forest department officials. He also advised them to use drone surveys and AI technology to prevent tax leaks.
CM Siddaramaiah has also instructed excise department officials to prevent smuggling of liquor from neighbouring states into Karnataka, as the department remains one of the highest revenue-generating departments in the state.
In Bengaluru, the Bruhat Bengaluru Mahanagara Palike (BBMP) Advertisement Byelaws 2023, which is available with the government for final consent, proposes auctioning licenses for paid advertisements along many roads. These boards can be installed on private properties.
The new by-laws replaced the 2018 regulations that banned commercial advertising in Bengaluru, except under public-private partnerships. The new by-laws allow paid ads on metro pillars, outside metro stations, BMTC terminals, bus stops, and public toilets, potentially boosting non-fare revenue for public transport utilities.
Monetising land is also among the strategies suggested by BCG to unlock budget potential. The government plans to monetise 15,000 acres in Nandagudi and 9,800 acres in Bidadi for townships, along with 300-400 acres across 73 land parcels.
A senior bureaucrat, speaking on the condition of anonymity, defended the decision saying that the aim was to optimise the state’s revenue generation. “The guarantee schemes are already making an impact in people’s lives and fund allocation is already in place for these schemes. These changes are being made so that further revenue can be generated for additional development works,” he said.