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Karnataka Chief Minister HD Kumaraswamy on Thursday delivered on his pre-poll promise and waived off loans borrowed by farmers of the state, both from cooperative and nationalised banks. While the waiver made some happy, it came with its fair share of restrictions and conditions.
The Congress-JD(S) coalition, in its maiden budget, announced a cap of Rs 2 lakh for the loan waiver. The families of government officials, official cooperative sectors, farmers who have paid income tax for the past three years and ineligible recipients of farm loans will not benefit from this waiver.
Kumaraswamy, in his budget speech, said , “I have decided to waive crop loans of farmers up to December 31, 2017 in the first stage. As an encouragement for farmers who repaid the loan within time, I have decided to credit the repaid loan amount or Rs 25,000, whichever is less.”
This brings down the cost of the waiver from the estimated Rs 53,000 crore to Rs 34,000 crore, according to a Quint report.
Consequences of the waiver
However, in its bid to help the farmers, the government has made liquor, power and fuel costlier for the state. The taxes on Indian Made Liquor (IML) have been increased by 4 percent. This is over and above the 8 percent increase announced by Siddaramaiah in the last budget.
The state’s excise department aims to collect Rs 19,750 crore in 2018-19.
Taxes levied on fuel and electricity have also been increased to compensate for the additional expense this year. Kumaraswamy said, “Keeping in view the need to augment resources for welfare needs of the state, the rate of tax on petrol is proposed to increase from present 30 percent to 32 percent, and diesel from 19 percent to 21 percent.”
Private sector service vehicles may face a 50 percent increased Motor Vehicles Tax based on square metre of floor area.
Recently, there were comments in the state assembly that a full-fledged new budget was not needed since the major flagship government schemes would be continued this year as well.
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