KARNATAKA - of Planning Commission

Financing Human DevelopmentFIGURE 3.1.3Revenue deficit as percentage of fiscal deficit: 1990-91 to 2002-03Per cent60504030201000-10-201990-911991-921992-931993-941994-951995-96Years1996-971997-981998-991999-20002000-012001-022002-03Karnataka’s planexpenditure overa six-year period(2000-01 to 2005-06)yields interesting insightsabout the state’s prioritysectors. Investmentsin irrigation exceededinvestments in the socialsector in all years except2001-02 and 2003-04over a six-year period.expenditure on salaries and pensions accountedfor almost 34 per cent of the increase inrevenue expenditures between 1997-98 and2001-02. The increase in interest paymentsaccounted for about 17 per cent of the increasein revenue expenditure between 1997-98 and2001-02. Together, interest payments, salariesand pensions accounted for about 51 per centof the rise in revenue expenditure between1997-98 and 2001-02. In comparison, less than10 per cent of the expenditure was made on physicalcapital outlay between the period 1997-98 and2001-02.The persistence of large revenue and fi scal defi citshas increased the debt burden of the state. Theoutstanding debt of the state government as aproportion of GSDP increased from about 17.6per cent in 1995-96 to about 25.7 per cent ofGSDP in 2001-02. Correspondingly, interestpayments increased from 12.35 per cent of totalrevenue expenditure in 1995-96 to 14.4 percent in 2001-02. The Karnataka governmenthas now embarked on debt restructuring byswapping high interest loans for low interestloans. The burden of debt servicing is, thus,likely to come down in the next few years. In theshort and medium term this will provide somefi scal space for spending on more productivesectors.Sectoral prioritiesPlan expenditure 5 is associated with new policyinitiatives and development, while non-planexpenditure relates to maintenance of schemes thatwere introduced in earlier Plan periods. Karnataka’splan expenditure over a six-year period (2000-01to 2005-06) yields interesting insights about thestate’s priority sectors. Investments in irrigationexceeded investments in the social sector in all yearsexcept 2001-02 and 2003-04 over a six-year period(Table 3.1.3). Investments in energy exceededthose in education in all six years. Since the term‘social services’ encompasses education, health andfamily welfare, rural development, social welfare,and the development of women and children,to name a few sectors, the actual share of eachsub-sector is quite low.IrrigationKarnataka is second only to Rajasthan in theextent of arid land in the state. According to the1997 NSSO fi gures, the percentage of irrigatedland in the state is 19.33 per cent, which isconsiderably less than the all-India average of35.39 per cent. Even though the percentageof irrigated land in the state has increasedsince then, Karnataka still has less land underirrigation than the all-states’ average as well asthe other southern states. Most of the arid landis concentrated in north and central Karnataka,5Annual Plans, Karnataka.38