Karnataka’s Rs 12,000 Crore Shortfall: Government Plans Borrowing Cuts and Subsidy Revisions | Bengaluru News – Times of India

To address this, the government plans to tap into cash-rich state-run boards and corporations and invest in those needing funds instead of relying on external borrowings.

BENGALURU: Staring at a 12,000 crore shortfall, plans are afoot to reduce the borrowing burden. In what is a telltale sign of a welfare state spending close to a whopping Rs 90,000 crore on guarantee schemes and subsidies, the Karnataka govt finds itself in a precarious position, being pushed further into debt with coffers nearly empty for development works.
According to senior govt personnel, at the beginning of the third quarter of the 2024-25 fiscal year, the revenue collection estimates show signs of a shortfall of no less than Rs 12,000 crore. “At a recent meeting with the finance department, it was estimated that with the present trend of collection, the shortfall is expected to be about Rs 12,000 crore. As a result, we have asked the departments to buckle up,” said Chief Minister Siddaramaiah’s economic advisor, Basavaraj Rayareddy.
Rayareddy stated that the biggest expense for the govt has been the subsidies and the guarantee schemes. It is estimated that under the Anna Bhagya scheme alone, 853 of every 1,000 people in Karnataka are availing themselves of the benefits of the scheme. “With 4.47 crore population having a BPL card out of the 6.5 crore population, it is extremely unwieldy and needs a relook,” said one govt official.
At the other end, trends suggest that undivided families are splitting and showing themselves as individual families to avail the Gruhalakshmi benefits of Rs 2,000 per female head of a family. With such a scenario and the govt expecting to rationalise the guarantee schemes, the state is looking inwards to generate funds for development work rather than depend on external borrowings.
The finance department hired consultants, Boston Consulting Group (BCG), who indicated that there needs to be a more “reliable” source of income without external borrowings by taking money from cash-rich state-run boards and corporations and investing in those which require the funds. The govt has already rolled out an inter-corporate deposits (ICD) scheme to help the ailing Escoms and the Karnataka Power Corporation Limited (KPCL) by drawing money from the cash surplus boards and corporations like Karnataka State Mineral Corporation Limited and others.
It has also been proposed and finalised that state corporations like Karnataka State Electronics Development Corporation (Keonics) are also going to enter into a joint venture with Mysore Sales International Limited (MSIL) to use the former’s land and the latter’s funds for setting up IT services facilities.