Excess commitments: Karnataka govt asked to stop clearing new works

FMRC has flagged that two departments have commitments that were five to eight times their annual budget

Karnataka's top-level bookkeepers have asked their boss, Chief Minister Basavaraj Bommai, to stop sanctioning new projects in two of the government's busiest departments - Public Works and Irrigation - after finding that they have bitten off more than they can chew.

In other words, the government's Fiscal Management Review Committee (FMRC) has flagged that these two departments have commitments that were five to eight times their annual budget.

This startling revelation finds mention in the Mid Year Review of State Finance that was tabled in the Assembly on Friday.

The FMRC has not only pulled up the government on this but also recommended that new works should not be sanctioned to the Public Works and Irrigation departments "till the commitments are brought down to a ratio of 1:3 (budget: cost of work approved)".

Official sources say that the practice of sanctioning works over and above the budgetary resources is the reason for pending bills worth Rs 22,000 crore, according to the Karnataka State Contractors' Association.

The Mid Year Review also raised concerns over the increase in the government's total outstanding liabilities (TOL), which currently stands at 26.6% of the state's GSDP. This is expected to hit Rs 4.57 lakh crore by the end of 2021-22.

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Expenditure on relief activities in flood-affected districts increased, the report noted. "The FMRC also observed that the state is providing funds beyond the SDRF and NDRF norms for flood-affected districts because of which the financial burden has increased on the state," it said, recommending the government to stick to the Centre's guidelines when granting aid.

Reduced expenditure in key areas of social infrastructure - health and education - was also flagged.

Encouraging signs

The review noted that there are signs of economic recovery in the state. "The economic slowdown due to the Covid pandemic reduced the revenue collections of the state. So, the state budgeted a revenue deficit budget in 2021-22. However, the state's stringent efforts to combat the pandemic had resulted in the recovery of the economy and increase in revenue collections," it said.

The state recorded a revenue surplus of Rs 3,294 crore in the first half of 2021-22, compared to a deficit of Rs 4,041 crore in the corresponding period last year.

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