Post GST rate rationalisation, Karnataka govt. mulls ways to tackle revenue mobilisation challenges
GS3Economy · S&T · Environment · Security· Fiscal policy, budget & taxation (GST)· Mains·
Why in news
The Karnataka government is exploring land monetization and liquor license auctions to offset a ₹15,000 crore annual GST revenue loss following rate rationalization.
Background
Karnataka faces a revenue shortfall while implementing five guarantee schemes worth ₹52,000 crore. The state's borrowing has increased significantly as revenue collection from various sources has declined.
Facts for Prelims
- FactEstimated annual GST revenue loss in Karnataka due to rate rationalization: ₹15,000 crore
- FactTotal value of Karnataka's five guarantee schemes: ₹52,000 crore
- PlaceKarnataka: State facing fiscal challenges and increased borrowing
For Mains
Q. Discuss the fiscal challenges faced by Indian states in balancing ambitious social welfare schemes with declining tax revenues and rising debt.
Dimensions to cover in your answer
- Fiscal stress: Balancing high-expenditure social guarantee schemes with shrinking GST revenue base
- Debt sustainability: Risks of increased state borrowing to bridge the revenue-expenditure gap
- Revenue diversification: Trade-offs between land monetization and long-term asset utility
Keywords: Fiscal Federalism · Revenue Mobilisation · Debt Sustainability · Social Welfare Expenditure · GST Rationalisation
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