JOIN USKarnataka improving, but debts growing rapidly: Report
Karnataka has controlled inflation, its Gross State Domestic Product (GSDP) is up and borrowings are under limits, but debts are growing at “a rapid pace”, the Mid Year Review of State Finances tabled in the Assembly on Monday said.
The state government has “effectively brought down” inflation from 6.39 per cent in April 2022 to 5.81 per cent in September 2022, the report said. This was below the national inflation rate of 7.4 per cent at the end of September.
The Mid Year Review also said the state’s revenues are increasing. Own tax revenue grew 13.8 per cent between April and September when compared with the corresponding period last year.
There was growth across all major revenue sources — commercial taxes (6.1 per cent), excise (18.7 per cent), stamps and registration (38.5 per cent) and motor vehicle taxes (58 per cent), the report showed.
Karnataka’s gross state domestic product (GSDP) has risen from Rs 18.85 lakh crore to Rs 21.81 lakh crore for 2022-23, taking fiscal deficit below the 3 per cent limit for the first time since Covid-19 wreaked havoc on the state’s finances in 2020-21.
Fiscal deficit is at 2.82 per cent, against 3.44 per cent in 2021-22 and 3.03 per cent in 2020-21. The Karnataka Fiscal Responsibility Act (KFRA) requires the fiscal deficit to be under 3 per cent of GSDP.
KFRA also requires total liabilities to be under 25 per cent of the GSDP. Liabilities now stand at 23.76 per cent. In absolute numbers, however, liabilities have risen from Rs 4.57 lakh crore last year to Rs 5.18 lakh crore this fiscal.
A rise in outstanding debts is resulting in higher interest payments, the Fiscal Management Committee warned in the report. The committee also said that because of the revenue deficit, money borrowed is being used on “consumptive” expenditure. The committee has pointed to “urgent need” for rationalising schemes and cutting “inefficient” subsidies.
The committee also flagged “high” outstanding commitments in departments such as irrigation and public works. “These commitments are far higher than the annual budgetary outlay,” the report said, adding that it was necessary to “go slow” on approving new works.
Supplementary estimates
Chief Minister Basavaraj Bommai, also the finance minister, tabled in the Assembly supplementary estimates aggregating Rs 8,001.13 crore. Supplementary estimates are additional expenditures incurred by the government over and above the budget provisions.
This includes Rs 300 crore to prepare for the 2023 Assembly elections, Rs 500 crore on crop loss compensation, Rs 638 crore to clear outstanding bills of infrastructure repaired in Kodagu due to the 2019 floods and landslides, Rs 150 crore for construction and repair of classrooms in government institutions, Rs 256 crore as loan to RGHCL to complete 20,000 homes under CM 1-lakh Housing scheme and so on.