Accusing the State government of driving away investors from Karnataka, Union Finance Minister Nirmala Sitharaman on Sunday said the government’s policies had driven the rate of inflation in the State above the national average.
“Because of the worsening law and order situation, industries are scared and they want to get out. I do not want to take the names of companies that are going out,” she told presspersons here in a rebuttal to the allegations that Karnataka and many other States have been slighted in the recently presented Union Budget.
Ms. Sitharaman said: “Karnataka is facing high inflation which is above the national average. The rate of inflation between June 2023 and June 2024 in Karnataka was 6.1%, much higher than the national average of 5.4%. The rate of inflation in Karnataka between June 2022 and May 2023, before the Congress came to power was 5.3%, lower than the national average of 6%.” Blaming the State government’s actions as responsible for spiking up the inflation, she said: “Petrol and diesel prices were hiked by about ₹3 and ₹3.5 a litre, respectively, and milk price has gone up. The property guidance value has gone up from 25% to 30%, the stamp duty has increased by 200% to 500%, vehicle registration fee has gone up by 3%, and an additional 10% lifetime tax has been imposed on EVs.”
Inflation, the Finance Minister said, “Is naturally higher than the national average due to these factors. The revenue deficit is high, capital expenditure is not happening or happening less. If you don’t invest on capital expenditure, employment will not come to Karnataka, and the demand and consumption will also not increase.” She said: “Open market borrowings have increased and it has touched over ₹1 lakh crore. Borrowing after borrowing to fulfil the promise (of five guarantees) is happening. Borrowing is without limit. The State had revenue surplus two years ago, and now it is revenue deficit.”
Ms. Sitharaman said, “Karnataka — which was healthy, had revenue surplus, invested on CAPEX, and drew investment — is today frightening investments out of the State because of the steps that they (government) are taking one after the other. I am not sure if they are consulting industry or other stakeholders.”
