Rs 30,000 crore in arrears, blocked capex: CAG report raps government

The report, tabled in the legislature recently, found that the government had Rs 24,917 crore of revenue arrears under Goods and Services Tax (GST) and excise for the fiscal ending March 31, 2025.

Bengaluru: The Karnataka government, struggling with rising expenditure and increased dependence on debt, was found sitting on nearly Rs 30,000 crore in revenue arrears and ‘blocked’ capital, according to a Comptroller & Auditor General (CAG) report. 

The report, tabled in the legislature recently, called for strengthening tax compliance, widening tax base, revision of user charges and monetisation of idle government assets. On the spending side, the CAG pitched for better targeting of subsidies, controlling salary and pension growth and proper classification of expenditure. 

The audit found that the government had Rs 24,917 crore of revenue arrears under Goods and Services Tax (GST) and excise for the fiscal ending March 31, 2025.

In fact, the total arrears stood at Rs 53,907.98 crore. This included Rs 28,887.3 crore of GST under litigation. Similarly, against the excise arrears of Rs 601.78 crore, recoveries of Rs 103.46 crore were stayed by the High Court. So, the remaining Rs 24,917.22 crore arrears had no litigation.

“An efficient collection mechanism should increase the revenue realisation for the state,” the CAG said.

The CAG also found that the state had 4,328 incomplete projects costing an estimated Rs 11,500 crore. Until 2024-25, the government had spent Rs 5,067 crore on these ‘incomplete’ projects. “Therefore, due to non-completion of these 4,328 projects, capital expenditure of Rs 5,067 crore remained blocked,” the audit stated. “Blocking funds in incomplete projects/works impinges negatively on the quality of expenditure and deprives the state of the intended benefits for prolonged periods.”

Of the 4,328 works, 276 were shown as ‘incomplete’ due to pending payment of bills worth  Rs 2,298 crore, the CAG pointed out. 

Executive orders

For the fiscal ending March 2025, the government released Rs 10,035.13 crore through executive orders prior to legislative approval. This was “contrary” to Constitution Article 266(3), the CAG said. The state should “avoid resorting to executive route of incurring expenditure before legislature sanction,” it said.