Daijiworld Media Network – Bengaluru
Bengaluru, Aug 20: While Karnataka has achieved a remarkable milestone by becoming the top state in India in terms of per capita income in the financial year 2024–25, a new report from the Comptroller and Auditor General (CAG) has raised serious concerns over the state’s growing fiscal deficit — attributed largely to the financial burden of its five flagship guarantee schemes.
Presenting the CAG report in the Legislative Assembly on Tuesday, chief minister Siddaramaiah revealed that the state had borrowed a staggering Rs 63,000 crore in the financial year 2023–24 to fund the guarantee schemes — namely Anna Bhagya, Shakti, Gruha Lakshmi, Yuva Nidhi, and Gruha Jyothi.
According to the report, the fiscal deficit has widened significantly — from ?46,623 crore in the previous year to Rs 65,522 crore in 2023–24 — marking a sharp rise driven by increased social welfare spending. The guarantee schemes, while popular among the masses, are exerting increasing pressure on the state's resources and long-term financial health.
The scheme-wise spending in 2023–24 included Rs 16,964 crore for Gruha Lakshmi, Rs 8,900 crore for Gruha Jyothi, Rs 7,384 crore for Anna Bhagya, Rs 3,200 crore for Shakti (free bus travel), and Rs 88 crore for Yuva Nidhi (youth allowance).
To accommodate the costs of these schemes, the state resorted to significant market borrowing. The Rs 63,000 crore net borrowing marks an increase of ?37,000 crore over the previous year’s borrowing.
Notably, the CAG report highlighted that in order to finance the welfare commitments, the state had to reduce capital expenditure on infrastructure by Rs 5,229 crore, raising concerns over long-term developmental investments.
Despite a 1.86% increase in revenue compared to the previous year, Karnataka’s expenditure surged by 12.54%, largely due to the guarantee schemes. The CAG cautioned that while the schemes offer immediate relief to citizens, they pose a substantial burden on the state’s finances and could impact future economic stability if continued unchecked.
The report has sparked debate over the sustainability of such large-scale welfare programmes, especially in a state that’s simultaneously striving for infrastructure growth and economic leadership.