Freebies first, growth later? Karnataka cuts packages to fund welfare schemes, CAG flags deficit dangers | India Information
NEW DELHI: The Karnataka authorities’s rising expenditure on welfare schemes has positioned strain on its funds, forcing cuts in some ongoing programmes, the Comptroller & Auditor Common (CAG) stated in its report for the 2024-25 fiscal, tabled within the Meeting on Thursday.
Assure schemes devour vital income
The CAG famous that the state spent Rs 52,525 crore on 5 assure schemes — Shakti, Gruha Lakshmi, Gruha Jyoti, Yuva Nidhi and Anna Bhagya, in 2024-25. The report stated this accounted for round 20% of income receipts and 27% of the state’s personal income, highlighting the schemes’ heavy burden on the price range.“Although the income development is steady, it’s inadequate to soak up the recurring prices of the assure schemes and therefore the state must depend on borrowings to fund the assure schemes,” the report stated. Throughout 2024-25, whereas the state’s income rose by 10.63%, its expenditure grew by 14.99%, largely because of the assure schemes.
Cuts to different programmes and rising borrowings
The CAG highlighted that rising subsidies compelled the federal government to cut back funds for some ongoing programmes, together with diet, help to native our bodies, gram panchayats in rural growth programmes and concrete growth initiatives.The mismatch between receipts and expenditure contributed to a income deficit of Rs 20,834 crore, whereas the fiscal deficit rose from Rs 65,522 crore in 2023-24 to Rs 85,030 crore in 2024-25, reported information company PTI. To bridge the hole, the state undertook web market borrowings of Rs 71,525.15 crore, up Rs 8,525.15 crore from the earlier yr.
Considerations over capital expenditure and debt servicing
Whereas general capital expenditure rose by Rs 5,786 crore, the report stated precise funding in infrastructure elevated by solely Rs 3,284 crore after adjusting for central help, investments, and off-budget borrowing. The CAG warned that this “compression in gross capital formation might show detrimental to future development prospects.”It additional famous that greater borrowing would improve debt servicing obligations, which might crowd out spending on developmental, infrastructure, and welfare measures. The report cautioned that continued borrowing development might threat breaching the Karnataka Fiscal Accountability Act (KFRA) fiscal targets.
