Pranay Kotasthane and Varun Ramachandra Analyse the State’s Finances after the Fourteenth Finance Commission (FFC).
Analysing the second Karnataka budget since the Fourteenth Finance Commission award, it is noted that, as assured, more fiscal space is made available to the state government. With greater untied funds, the state has budgeted for higher capital expenditure in some key areas— urban development, police, and tribal welfare—even as it failed to build capacity for power generation, and has introduced too many schemes with too little funds allocated to each.
The research publication analyses in detail the impact of FFC’s recommendations on budget allocation in Karnataka. The greater fiscal autonomy provided by the FFC Award marks a new phase in the union-state relations of India. Although there are concerns about cuts by the union in the social sector, Karnataka has countered this by increasing its spend in the social sector.
The research also takes into account some of the potential actions required to reduce ill-targeted subsidies and transfers in the power, social welfare and agricultural sector.
Featured image: http://www.finance.kar.nic.in/bud2015/bud2015.htm