<p>Karnataka has long been recognised as one of India’s fiscally progressive states. Its tax base is strong, its industrial output vibrant, and its welfare programmes among the most inclusive in the country. Yet, as the state navigates growing demands on its budget from education and infrastructure to welfare and climate resilience, a new question arises: How can Karnataka make every rupee spent more effectively?</p>.<p>In an era where public finances are stretched, the conversation must move beyond resource mobilisation and focus on how effectively these resources are used. Karnataka’s fiscal record remains commendable. Its tax revenue touched Rs 1.82 lakh crore in 2024-25, one of the highest among large states, and its debt-GSDP ratio remains within the Fiscal Responsibility and Budget Management (FRBM) limit. However, rising social sector obligations, growing salary and pension commitments, and infrastructure backlogs have all tightened fiscal space. The challenge is therefore not one of generating funds, but of spending them smarter, ensuring that every rupee delivers maximum developmental value.</p>.<p>The CAG’s 2023 State Finance Report highlighted the uneven effectiveness of Karnataka’s developmental spending. Many programmes, though well-intentioned, overlap in purpose and spread administrative resources thin. The state currently operates over 1,800 schemes across different departments (Economic Survey of Karnataka, 2024-25). Several of these, particularly in rural development, agriculture, and education, target the same population groups with similar objectives but different delivery systems. This leads to duplication, coordination gaps, and reduced efficiency. Rationalising these schemes into broader, integrated missions could help reduce overheads while improving outcomes. For instance, rather than running multiple fragmented schemes for farmers covering soil health, irrigation support, and input subsidies, Karnataka could consolidate them into a single Farm Productivity and Resilience Mission, incorporating digital monitoring, efficient water use, and market linkage initiatives.</p>.Karnataka: Soon, app-based system to monitor sales at fair price shops.<p>Fund utilisation also needs closer attention. The CAG’s report noted that over Rs 10,000 crore in sanctioned funds remained unspent or without utilisation certificates, particularly in major sectors such as health, education, and rural infrastructure. The audit observed that delays in implementation and weak financial monitoring continue to constrain the effectiveness of public spending. These are not failures of fiscal intent but of implementation processes. Funds are often released late, tendering is delayed, and expenditures tend to accumulate towards the end of the financial year, reducing quality and impact. Expanding the use of the Integrated Financial Management System (IFMS) can change this. Real-time monitoring of expenditure and linking fund releases to performance indicators would improve efficiency and transparency.</p>.<p>Improving efficiency in revenue spending could free up fiscal space for productive capital investments. Redirecting modest savings from underutilised schemes, redundant administrative layers, or low-impact subsidies would yield long-term economic dividends. In the education and health sectors, which together account for over Rs 60,000 crore in annual spending, there are opportunities to improve outcomes through better planning and monitoring. Many projects face cost overruns due to delays in procurement and slow implementation. Introducing mid-year outcome reviews and performance-linked fund releases can enhance accountability.</p>.<p>Equally important is decentralisation. The state’s consistent top ranking in devolution of powers, along with participatory planning initiatives, illustrates how decentralised decision-making can enhance accountability and ensure that development priorities reflect ground realities. While these efforts are ongoing, they underscore how bottom-up planning can improve efficiency and accountability.</p>.<p><strong>Focus on outcomes</strong></p>.<p>For Karnataka to sustain its growth trajectory, efficiency in public expenditure must become a policy priority. The state already has the institutional and digital infrastructure to lead this shift. What is needed is a systematic move from input-based budgeting, focused on how much is spent, to outcome-based governance, where success is measured by tangible results. Regular departmental expenditure reviews should be institutionalised, identifying schemes with low utilisation or overlapping objectives, and allowing funds to be reallocated to high-performing areas. The Budget Estimates vs Actual Expenditure gap, which averages around 10-12% in key departments, underscores the potential gains from closer monitoring. Linking releases to progress metrics will encourage timely spending and discourage the year-end rush that compromises quality.</p>.<p>Digital financial management tools can strengthen transparency. Expanding IFMS into a comprehensive public dashboard, integrated with Kutumba and Seva Sindhu platforms, would enable the government and citizens to track spending in real time. This would not only improve accountability but also build public trust in the efficiency of welfare and development programmes. Karnataka’s fiscal journey is not about cutting spending but about spending better. By rationalising schemes, improving fund utilisation, and institutionalising efficiency, the state can free up resources for transformative investments.</p>.<p><em>(The writer is an associate professor, Department of Economics, Christ University, Bengaluru)</em></p><p><em>Disclaimer: The views expressed above are the author's own. They do not necessarily reflect the views of DH.</em></p>
<p>Karnataka has long been recognised as one of India’s fiscally progressive states. Its tax base is strong, its industrial output vibrant, and its welfare programmes among the most inclusive in the country. Yet, as the state navigates growing demands on its budget from education and infrastructure to welfare and climate resilience, a new question arises: How can Karnataka make every rupee spent more effectively?</p>.<p>In an era where public finances are stretched, the conversation must move beyond resource mobilisation and focus on how effectively these resources are used. Karnataka’s fiscal record remains commendable. Its tax revenue touched Rs 1.82 lakh crore in 2024-25, one of the highest among large states, and its debt-GSDP ratio remains within the Fiscal Responsibility and Budget Management (FRBM) limit. However, rising social sector obligations, growing salary and pension commitments, and infrastructure backlogs have all tightened fiscal space. The challenge is therefore not one of generating funds, but of spending them smarter, ensuring that every rupee delivers maximum developmental value.</p>.<p>The CAG’s 2023 State Finance Report highlighted the uneven effectiveness of Karnataka’s developmental spending. Many programmes, though well-intentioned, overlap in purpose and spread administrative resources thin. The state currently operates over 1,800 schemes across different departments (Economic Survey of Karnataka, 2024-25). Several of these, particularly in rural development, agriculture, and education, target the same population groups with similar objectives but different delivery systems. This leads to duplication, coordination gaps, and reduced efficiency. Rationalising these schemes into broader, integrated missions could help reduce overheads while improving outcomes. For instance, rather than running multiple fragmented schemes for farmers covering soil health, irrigation support, and input subsidies, Karnataka could consolidate them into a single Farm Productivity and Resilience Mission, incorporating digital monitoring, efficient water use, and market linkage initiatives.</p>.Karnataka: Soon, app-based system to monitor sales at fair price shops.<p>Fund utilisation also needs closer attention. The CAG’s report noted that over Rs 10,000 crore in sanctioned funds remained unspent or without utilisation certificates, particularly in major sectors such as health, education, and rural infrastructure. The audit observed that delays in implementation and weak financial monitoring continue to constrain the effectiveness of public spending. These are not failures of fiscal intent but of implementation processes. Funds are often released late, tendering is delayed, and expenditures tend to accumulate towards the end of the financial year, reducing quality and impact. Expanding the use of the Integrated Financial Management System (IFMS) can change this. Real-time monitoring of expenditure and linking fund releases to performance indicators would improve efficiency and transparency.</p>.<p>Improving efficiency in revenue spending could free up fiscal space for productive capital investments. Redirecting modest savings from underutilised schemes, redundant administrative layers, or low-impact subsidies would yield long-term economic dividends. In the education and health sectors, which together account for over Rs 60,000 crore in annual spending, there are opportunities to improve outcomes through better planning and monitoring. Many projects face cost overruns due to delays in procurement and slow implementation. Introducing mid-year outcome reviews and performance-linked fund releases can enhance accountability.</p>.<p>Equally important is decentralisation. The state’s consistent top ranking in devolution of powers, along with participatory planning initiatives, illustrates how decentralised decision-making can enhance accountability and ensure that development priorities reflect ground realities. While these efforts are ongoing, they underscore how bottom-up planning can improve efficiency and accountability.</p>.<p><strong>Focus on outcomes</strong></p>.<p>For Karnataka to sustain its growth trajectory, efficiency in public expenditure must become a policy priority. The state already has the institutional and digital infrastructure to lead this shift. What is needed is a systematic move from input-based budgeting, focused on how much is spent, to outcome-based governance, where success is measured by tangible results. Regular departmental expenditure reviews should be institutionalised, identifying schemes with low utilisation or overlapping objectives, and allowing funds to be reallocated to high-performing areas. The Budget Estimates vs Actual Expenditure gap, which averages around 10-12% in key departments, underscores the potential gains from closer monitoring. Linking releases to progress metrics will encourage timely spending and discourage the year-end rush that compromises quality.</p>.<p>Digital financial management tools can strengthen transparency. Expanding IFMS into a comprehensive public dashboard, integrated with Kutumba and Seva Sindhu platforms, would enable the government and citizens to track spending in real time. This would not only improve accountability but also build public trust in the efficiency of welfare and development programmes. Karnataka’s fiscal journey is not about cutting spending but about spending better. By rationalising schemes, improving fund utilisation, and institutionalising efficiency, the state can free up resources for transformative investments.</p>.<p><em>(The writer is an associate professor, Department of Economics, Christ University, Bengaluru)</em></p><p><em>Disclaimer: The views expressed above are the author's own. They do not necessarily reflect the views of DH.</em></p>
