HDK waives `34K cr farm loans, but makes fuel, power costlier

Bengaluru: Keeping his pre-poll promise, Karnataka Chief Minister H D Kumaraswamy on Thursday announced a Rs 34,000 crore farm loan waiver, but in a contentious move proposed a hike in taxes on fuel and power in the maiden budget of the JD(S)-Congress coalition government.

Kumaraswamy, who holds the finance portfolio, said the increase in taxes on petrol, diesel, power and liquor was aimed at mopping up additional revenue to offset the burden on the exchequer caused by the farm loan waiver.

He, however, capped the agricultural loan to be written off at Rs 2 lakh, saying it would not be right to waive loans of higher value. Kumaraswamy said all defaulted crop loans up to December 31, 2017, will be written off in the first phase.

The JD(S) leader had, in the run-up to the assembly polls, promised he would waive farm loans totalling Rs 53,000 crore within 24 hours of assuming office.

The chief minister said the quantum of loans paid by every farmer, who had not defaulted on repayment, or Rs 25,000, whichever is less, will be credited to their bank accounts.

However, in a potentially controversial move, he proposed to increase the rate of tax on petrol and diesel by Rs 1.14 and Rs 1.12 per litre respectively. The tax on electricity will also be raised from the existing 6 to 9 per cent. The Congress, which is playing second fiddle to the JD(S) in Karnataka despite having more than double the number of MLAs, has been hugely critical of the Modi government over the frequent upward revision of fuel prices.

Congress president Rahul Gandhi had even thrown a "fuel challenge" to Prime Minister Narendra Modi after the latter accepted an online fitness dare from Indian cricket captain Virat Kohli in May.

The BJP had a field day as it used the fuel price hike in the state to hit back at Congress chief Rahul Gandhi.

On Thursday afternoon, the BJP posted a scathing tweet: No takers for Rahul Gandhi's #FuelChallenge, not even his government! This is what happens when you pretend to know and preach things that you have no idea about!

The budget also proposes to raise from 10 paise per unit to 20 paise per unit the tax on consumption of captive energy. See P5