Karnataka debt jumps to ₹63,000 cr in FY24; CAG blames guarantee schemes

Karnataka's debt rose to ₹63,000 crore in 2023-24, with CAG flagging diversion of ?5,299 crore from infrastructure funds to guarantee schemes, raising concerns over public finances

The Karnataka government borrowed ₹63,000 crore in 2023-24 to cover the cost of its guarantee schemes and the financial gaps they created. This was ₹37,000 crore more than the net debt of ₹26,000 crore in the previous year, according to a report by the Comptroller and Auditor General (CAG).

 

The report said that from the money set aside for capital expenditure on infrastructure, about ₹5,299 crore was instead spent on guarantee schemes in 2023-24.

 

The CAG report was tabled in the Karnataka Assembly on Tuesday, highlighting the state’s rising debt burden and the pressure created by welfare guarantees on public finances.   

 

CAG flags impact of guarantee schemes on Karnataka’s finances

 

The CAG report has raised concerns over the effect of Karnataka’s five guarantee schemes on state finances. According to the report, the schemes made up 15 per cent of the government’s revenue expenditure in 2023-24.

 

Cost of five welfare schemes

 

The Congress government introduced the guarantees — Gruha Jyothi, Gruha Lakshmi, Anna Bhagya, Yuva Nidhi, and Shakti — soon after it took office in May 2023. Together, the programmes cost the state:

 

• ₹16,964 crore for Gruha Lakshmi

• ₹8,900 crore for Gruha Jyothi

• ₹7,384 crore for Anna Bhagya

• ₹3,200 crore for Shakti

• ₹88 crore for Yuva Nidhi

 

According to a release from the Principal Accountant General (Audit-1), the rollout of these schemes pushed up expenditure growth by 12.54 per cent compared to the previous year. This resulted in a revenue deficit of ₹9,271 crore.

 

The state's fiscal deficit also widened sharply, climbing from ₹46,623 crore in 2022-23 to ₹65,522 crore in 2023-24. To meet these expenses, the state borrowed nearly ₹63,000 crore from the market — ₹37,000 crore more than in the previous year.   

 

  The CAG audit further noted that increased welfare spending affected capital expenditure. Spending on infrastructure dropped by about ₹5,229 crore compared to 2022-23.

 

“Thus, implementation of the five guarantee schemes without rationalising existing subsidies/financial assistance or the benefits would place pressure on the state’s resources and have an influence on fiscal deficits and debt levels,” the CAG said in its report.