The Comptroller and Auditor Common of India (CAG) has raised issues over Karnataka’s monetary well being, pointing to the burden created by the state authorities’s 5 assure schemes. The audit, tabled within the Legislative Meeting this week, reveals that these programmes accounted for 15 % of the state’s income expenditure in 2023-24, forcing a rise in borrowings and lowering investments in long-term infrastructure tasks.
The schemes — Gruha Lakshmi, Gruha Jyothi, Anna Bhagya, Shakti, and Yuva Nidhi — have been allotted ₹36,537.96 crore for the monetary 12 months, with virtually all the quantity utilised. Gruha Lakshmi, which gives ₹2,000 per thirty days to girls heads of households, was the most important when it comes to expenditure at ₹16,964 crore. Gruha Jyothi, a free energy scheme, price ₹8,900 crore, whereas Anna Bhagya, which provides free rice, accounted for ₹7,344.68 crore. The Shakti scheme, offering free journey for girls, required ₹3,200 crore, and the Yuva Nidhi scholarship scheme price ₹88.88 crore.
The auditor’s evaluation linked the implementation of those ensures to a pointy improve in expenditure. The state’s total spending grew by 12.54 % in comparison with the earlier 12 months, whereas income progress stood at simply 1.86%. This mismatch pushed the state again right into a income deficit of ₹9,271 crore, regardless of a restoration from Covid-era financial slowdown in 2022-23.
“Implementation of the schemes resulted within the improve in progress of expenditure (12.54 % from the earlier 12 months) which was the contributing issue of Income Deficit of ₹9,271 crore. Consequently, fiscal deficit of the state additionally elevated from ₹46,623 crore in 2022-23 to ₹65,522 crore in 2023-24,” the report mentioned.
To handle the shortfall, the state authorities relied closely on borrowings. Internet market loans rose to ₹63,000 crore in 2023-24, which was ₹37,000 crore increased than the earlier 12 months. The CAG warned that such a steep improve in debt would place “an enormous compensation burden within the close to future” and irritate the state’s monetary pressure.
One of the placing findings was the affect of the ensures on capital expenditure. The auditor famous that funds accessible for infrastructure fell by ₹5,229 crore in comparison with the earlier 12 months. Because of this, incomplete tasks surged by 68%, an consequence the CAG described as detrimental to Karnataka’s progress prospects. “This compression in gross capital formation could show to be detrimental to future progress prospects,” it mentioned.
The long-term projections outlined within the report additionally painted a worrying image. Beneath the Medium-Time period Fiscal Plan for 2024-28, Karnataka expects a income deficit of ₹27,354 crore, with total borrowings prone to climb to ₹1.05 lakh crore. The auditor cautioned that until the federal government rationalises its subsidy and welfare commitments, the state’s assets will proceed to come back below strain.
On the identical time, the finance division defended the choice to implement the ensures. Through the Exit Convention held in January 2025, officers acknowledged the fiscal stress however argued that the schemes had “boosted the native financial system, diminished financial disparities and supported human capital improvement.”
The report has triggered a political storm, with the opposition seizing on the findings to assault the Congress-led authorities. Chief of Opposition R Ashoka mentioned the CAG’s evaluation confirmed Karnataka’s “monetary decline” below chief minister Siddaramaiah.
“The Karnataka authorities, for short-term political positive factors, is sacrificing the way forward for Karnataka. If this technique continues, Karnataka can be trapped in irrecoverable debt and financial chapter, with assured stagnation in improvement,” Ashoka remarked.
He highlighted the bounce in fiscal deficit as proof of mismanagement. “The fiscal deficit, which stood at ₹46,623 crore in 2022–23, has risen to ₹65,522 crore in 2023–24. This rising deficit is proof of how unscientific assure schemes are pushing Karnataka in direction of chapter,” he mentioned.
Ashoka additional identified that the discount in infrastructure spending has already slowed down improvement. “At this time’s assure schemes are ensures of future darkness, the CAG has warned,” he added.
He additionally criticised Siddaramaiah’s repute as an “financial professional,” saying the chief minister’s insurance policies have been damaging the state’s long-term prospects. “That is the working fashion of the self-proclaimed economist Siddaramaiah – the so-called ‘Karnataka Mannequin’ of the federal government. Keep in mind, historical past doesn’t file what number of budgets somebody introduced, however how a lot these budgets contributed to the state’s improvement and long-term progress,” Ashoka added.
