NEWS

• The Comptroller & Auditor General (CAG) released the State Finance Audit Report 2023-24, tabled in the Assembly.
• This is the first audit to assess the impact of the Karnataka government’s five ‘guarantee’ schemes:
  • Gruha Lakshmi
  • Gruha Jyoti
  • Anna Bhagya
  • Shakti
  • Yuva Nidhi
• Budget allocation for the schemes: ₹36,538 crore, forming 15% of revenue expenditure in 2023-24.

HIGHLIGHTS

Fiscal Impact

• Revenue growth: 1.86% (2023-24) vs last year.
• Expenditure growth: 12.54%, largely due to guarantees.
• Resulted in a revenue deficit of ₹9,271 crore, reversing recovery seen in 2022-23.
• Fiscal deficit rose from ₹46,623 crore (2022-23) to ₹65,522 crore (2023-24).

Borrowing and Debt Concerns

• To fund schemes and deficits, the state borrowed ₹63,000 crore, significantly higher than the previous year’s ₹26,000 crore.
• This raise concerns over:
  • Repayment burden in the near future.
  • Increased interest liabilities for the state treasury.

Impact on Capital Expenditure

• Infrastructure spending fell by ₹5,229 crore.
• Incomplete projects rose by 68%, signaling compression in capital formation.
• CAG warned this could be detrimental to future growth prospects.

Subsidy Burden

• Three schemes — Gruha Jyoti, Anna Bhagya, and Shakti — are subsidy-driven.
• Karnataka’s subsidy bill rose to ₹60,774 crore in 2023-24.

Divergent Views

• Finance Department’s stance: Schemes boost local economy, reduce disparities, and support human capital development.
• CAG’s caution: Without rationalising existing subsidies, the schemes will strain state finances and hurt fiscal sustainability.