CM bats for enhanced borrowing capacity

Chief Minister Siddaramaiah on Thursday appealed to the 14th Finance Commission to allow “fiscally sound” states like Karnataka to borrow more for infrastructure building, especially in the irrigation and power sectors, by revising debt ceiling.


In his address to members of the 14th Finance Commission, headed by Y V Reddy, Siddaramaiah said most of the budgetary resources were utilised for committed programmes, leaving very little for new schemes.

Present regulations prevent states from borrowing more than 3 per cent of the Gross State Domestic Product per annum. The commission interacted with top State government officials on Thursday. The new plan will come into effect across the country from April 2015. It will be valid for five years.

Siddaramaiah claimed that the State has maintained a fiscal discipline and managed expenses prudently. Karnataka has been investing borrowings only for priority asset formation. “Therefore, there is a need for revising the debt ceiling to enable full utilisation of sustainable debt potential of the states,” Siddaramaiah said.

The State requires Rs 50,000 crore to meet its full irrigation potential. Substantial investment is required on power plants to bridge the demand-supply gap, besides improving road network system in the State.

He pointed out that the State government is preparing a master plan for connecting all district headquarters by a four-lane road. An eight-lane “Kalyana Patha” from Bidar to Chamarajnagar was also on the cards to spur economic growth, he said.

The chief minister also sought Rs 16,000 crore for developing the Hyderabad-Karnataka region. With special status being granted to the region, constitutional obligation binds both Central and State governments to make efforts for its development.


“The requirement of funds for the infrastructure, agriculture, horticulture, animal husbandry, women and child development, health and education sectors in the region is Rs 16,000 crore,” Siddaramaiah said. He urged the commission to recommend required grants.

The commission is expected to finalise its recommendation by October 2014. It will hold discussions with all state governments, the Centre and relevant stakeholders.

The commission members are on a three-day visit to the State. They will visit Chikkaballapur town and surrounding villages on October 25 and leave for Delhi by afternoon.

State’s wish list

*  Increase size of Disaster Relief Fund as 80 pc of State is prone to drought
*  Create Goods and Service Tax Compensation Fund
*  More Central grants to states to design schemes based on specific requirements
*  Increase share of states in Central taxes from 32 to 40 pc
*  Planning to add 4,818 MW to the grid in 3 years.

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