The Karnataka government’s decision to hire “The Boston Consulting Group” (BCG) as a consultant appears to have divided the Congress party as Praveen Chakravarty (Chairman – Professionals’ Congress & Data Analytics) joined voices with the Bharatiya Janata Party BJP to criticise Chief Minister Siddaramaiah administration’s move to recruit the consulting giant in an attempt to increase revenue to fulfil its five election guarantees. The company will take a hefty Rs 9.5 crore for a six-month period. The finance department turns to BCG as a consultant to help “unlock” budgetary potential.
The Congress leader took to X (formerly Twitter) and expressed his opposition and stated that if one outsources essential political duties to outside, for-profit transactional consultants to win elections, then they must similarly outsource essential policy operations to the such consultants to govern.
If one wins elections by outsourcing core political functions to external fee charging transactional consultants, then one also governs by outsourcing core policy functions to similar consultants!https://t.co/O7xgk3T1mZ
— Praveen Chakravarty (@pravchak) June 20, 2024
However, later Praveen Chakravarty attempted to downplay his outspoken disapproval of the Karnataka government’s and referred to it as his “personal opinion”. Chakravarty also apologised for his comments after other Congress leaders slammed him. He claimed, “In retrospect, I should have been much more sensitive about the context. It was absolutely not intended as a personal criticism of any, let alone my own party’s. I have spoken with and expressed my apologies for causing inadvertent harm to the leadership in Karnataka.”
I posted my pvt opinion on the broader culture of outsourcing core political & policy functions to outside consultants with no ‘skin in the game’.
— Praveen Chakravarty (@pravchak) June 21, 2024
It’s an issue that is debated widely in research circles & my comment was purely academic.
In retrospect, I should have been much…
“What is the need of the BCG when a self-proclaimed economist like Siddaramaiah is the chief minister,” Leader of the Opposition of the Karnataka Legislative Assembly questioned and highlighted, “Not sure whether it will boost the revenues of the state government, but it will definitely boost the revenues of a private consultancy firm (sic) at the cost of Karnataka’s taxpayers.”
The Congress administration was also criticised by BJP state unit president BY Vijayendra for their “outrageous” decision to employ a “foreign” consultant. He declared, “This is akin to handing over the reins to the East India Company.” The politician further charged, “When the state government operates under the directions of an external agency, the welfare of the people takes a backseat, and innocent citizens are the ones who suffer.”
There is pressure on the Congress government to raise Rs 50,000-60,000 crore annually to fund development projects and carry out the five guarantees which would benefit 5.10 crore individuals in Karnataka at the cost of Rs 36,000 crore from the state’s coffers in 2023–2024. The five promises are Anna Bhagya (10 kg of rice per month to every member of BPL families), Yuva Nidhi (Rs 3,000 dole to unemployed graduates and Rs 1,500 to unemployed diploma holders for two years in the 18 to 25 age group), Shakthi (free travel for women across Karnataka in state buses), Gruha Lakshmi (Rs 2,000 to every woman head of a family) and Gruha Jyoti (200 units electricity free to every household).
This fiscal year, Chief Minister Siddaramaiah has allotted Rs 52,009 crore for the programmes. According to reports, the BCG recommended in its draft report that the government concentrate on finding new revenue streams in industries like mining and asset monetisation. One proposal, for instance, is to commercialize around 25,000 acres of property close to Bengaluru. The Karnataka government is reportedly considering creating planned satellite cities in and around Bengaluru as well as in Bidadi, Anekal, Hoskote, Devanahalli and Doddaballapur.
“When we create infrastructure, housing, industrial layouts, and IT corridors, then it will increase the value of land and some amount of land can be monetised to raise funds for development,” a source unveiled. He added that efforts are being explored to enhance expenditure management in departments including public works, electricity, irrigation, rural development and Panchayati Raj.
Additionally, the state administration is looking for creative ways to raise money. The state administration hopes to raise an extra Rs 5,000 crore every fiscal year if these recommendations are put into practice. More GST and property tax compliance, according to Additional Chief Secretary (Finance), LK Ateeq, would also assist in increasing revenue.
The consultant’s responsibilities encompassed devising strategies to augment tax and non-tax earnings, reducing expenditures, investigating inventive funding avenues, cultivating public-private partnerships (PPPs), using technologies to seal gaps and capitalizing on assets. Targeted interventions are going to focus on four main departments: public works, energy, rural development and irrigation. New revenue streams within departments, such as mining and forests will also be sought out.
A few days ago, the state government announced an increase in the fuel cess on petrol and diesel which caused fuel prices to rise. Karnataka Sales Tax (KST) on gasoline was increased by the government from 25.92 per cent to 29.84 per cent, and on diesel from 14.3 per cent to 18.4 per cent with effect from 15th June. According to the Petroleum Dealers Association, this will likely result in an increase in gas and diesel prices in the state of about Rs 3 and Rs 3.05, respectively. “We need money for Guarantees and development, hence there has been an increase in fuel price,” said State Minister for Commerce and Industries MB Patil.
“The water tariff has not been increased in Bengaluru in the last 10 years. There has been a great loss. We have to take on new projects. No bank is coming forward to finance the Bangalore Water Supply and Sewerage Board (BWSSB). Every year we are suffering a big loss,” claimed Karnataka Deputy CM DK Shivakumar while addressing the media recently, insinuating a possible hike in water tariffs in the state.
