Mixed FY24: Karnataka government borrows more, but cuts expenses

Bengaluru: The Congress government could not meet revenue targets and borrowed more than it budgeted for, but the trimming of operating expenses was among some positives in the 2023-24 fiscal, which posed severe challenges due to the five flagship guarantee schemes. 

Karnataka’s guarantee schemes -- which cost Rs 36,000 crore in 2023-24 -- have given the Congress a template to woo voters in the Lok Sabha polls. The BJP has criticised the guarantees, saying they will push the state into bankruptcy. 

The government’s own-tax revenue collection fell short by Rs 12,192 crore, according to the finance department, which closed the books for the 2023-24 financial year that ended on March 31. 

Targets for commercial taxes, excise, stamps & registration and motor vehicle taxes -- the four major revenue sources -- were not met as “they were too ambitious”, according to sources.

In 2023-24, CM Siddaramaiah wanted to borrow Rs 85,818 crore but ended up borrowing Rs 4,400 crore more. In 2024-25, the CM wants to borrow Rs 1.05 lakh crore. According to sources, Karnataka is “relying heavily” on borrowings as GST compensation has stopped. “Earlier, the state got a generous GST compensation of Rs 20,000 crore,” one source said. 

The bitter pill was somewhat sweetened as the state cut revenue expenditure (salaries, pensions etc) by over Rs 11,000 crore -- from the estimated Rs 2.50 lakh crore to Rs 2.39 lakh crore in actuals. 

The state’s revenue deficit also came down from Rs 12,523 crore to Rs 9,996 crore. 

Further, the government managed to hike its capital expenditure by Rs 1,900 crore, mostly towards the Jal Jeevan Mission. 

“There were tight financial controls, mostly on some administrative expenses, purchases and procurements, which led to reduction in revenue expenditure,” a senior official told DH.

“Revenue deficit came down due to the slightly better buoyancy in central devolution,” he said, referring to Karnataka receiving Rs 40,280.88 crore under devolution against Rs 37,252 crore that was estimated in 2023-24.