Karnataka hires Boston Consulting Group to boost revenue for welfare guarantee schemes

The Congress state government is under significant pressure to secure funding for its five guarantees, which aim to benefit 5.1 crore residents and will cost the exchequer Rs 36,000 crore in the 2023-24 fiscal year.
Siddaramaiah
Siddaramaiah
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The Karnataka government has engaged Boston Consulting Group (BCG) as a consultant to increase revenue generation and curb financial leakages. The Congress state government is under significant pressure to secure funding for its five guarantees, which aim to benefit 5.1 crore residents and will cost the exchequer Rs 36,000 crore in the 2023-24 fiscal year. Chief Minister Siddaramaiah has set aside Rs 52,009 crore for these initiatives in this year's budget.

According to Money Control, BCG's draft report recommends identifying new revenue sources in departments such as mining and asset monetization. One suggestion includes monetizing approximately 25,000 acres of land near Bengaluru. The government is also considering creating planned satellite towns around Bengaluru in areas like Bidadi, Anekal, Hoskote, Devanahalli, and Doddaballapur so that the value of the land will increase and allow for monetization to fund further development.

The government aims to generate an additional Rs 5,000 crore per fiscal year. These suggestions are still under discussion, the report said, with some viable ideas potentially being incorporated into the next budget. The consultancy firm will now assist in enhancing both tax and non-tax revenues, trimming expenses, exploring innovative funding sources, and fostering public-private partnerships (PPPs). BCG will focus on increasing compliance and broadening the taxpayer base, particularly in commercial taxes, road tax, excise duties, and land registration fees/stamp duties.

The Karnataka government has enlisted the help of BCG on various occasions in the past. In February 2024, BCG presented the design for the proposed Knowledge, Healthcare, Innovation, and Research (KHIR) City near Bengaluru to the State Major Industries and Infrastructure Development Minister MB Patil. In 2020, the BJP government enlisted BCG's help to attract investments, extending the contract into 2021. BCG was also the knowledge partner for the Global Investors' Meet 2022. 

The five guarantees include free travel for women on non-AC state-run buses, 200 units of free power per month, Rs 2,000 per month for each female head of the family, 10 kg of food grains per month to BPL families, Rs 3,000 per month for two years to unemployed graduates, and Rs 1,500 per month for two years to unemployed diploma holders.

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