Karnataka’s fiscal deficit stands at Rs 14,000 crore in the current financial year, while the borrowings have increased from last year’s Rs 90,280 crore to Rs 1,04,000 crore, this year.
“The fiscal deficit is projected at Rs 14,000 crore and we are hoping to reduce the deficit by cutting down wasteful expenditure,” said Chief Minister Siddaramaiah, in his reply to a question by JDS MLC K.A. Thippeswamy in the Council.
Siddaramaiah’s admission of a fiscal deficit comes at a time when the financial health of Karnataka is under constant scrutiny by the opposition parties, which suspect the ruling Congress’s five guarantee schemes have burdened the state’s coffers and deprived funds for development work.
The five guarantee schemes – Anna Bhagya (free rice), Griha Lakshmi (monthly assistance of Rs 2,000 per household), Shakti (free bus travel for women), Griha Jyoti (free power) and Yuva Nidhi (unemployment benefit of Rs 1,500 and Rs 3,000 to fresh diploma holders and graduates, were the poll promises made by the Congress party ahead of the 2023 Assembly polls.
The chief minister, while claiming that the implementation of the guarantee schemes had not hindered development work, said the opposition’s claim that the state coffers are empty was far from the truth.
“The budget outlay for 2024-25 is Rs 3.71 lakh crore and we have allocated only Rs 52,000 crore for the five guarantees and spent Rs 1.20 lakh crore on development works. We have no dearth of funds. If we need more funds for guarantee schemes, we will raise it through supplementary estimates. However, it is true that for the first time, I have tabled a revenue deficit budget. During my earlier stint as the CM (2013-2018), I have tabled only revenue surplus budget. But this time, the revenue expenditure has increased abruptly forcing us to go for higher borrowing,” reasoned Siddaramaiah, who is also the finance minister.
Elaborating on the Karnataka government’s financial discipline, Siddaramaiah said that the Centre fixes the borrowings’ limit for every state as per Article 293 Clause 3.
“Borrowing money is inevitable for any state and Karnataka has not violated the norms fixed under the Financial Responsibility Act, 2002. As per the Act, the fiscal deficit cannot exceed 3 % of the GSDP, there should be a revenue surplus and the borrowings cannot exceed 25% of the GSDP. Our fiscal deficit is 2.9% in 2024-25 and borrowings are 23% of the GSDP, compared to neighbouring states Kerala (3.4% and 37%), Tamil Nadu (3.4% and 31%) and Maharashtra (2.6% and 19%),” explained the chief minister.
