Karnataka’s Five Guarantee Schemes Accounted For 15 Per Cent Of Revenue Spend, May Strain State Finances: CAG Report

The Comptroller and Auditor General of India (CAG) has warned that Karnataka’s five guarantee schemes have strained the state’s finances, raising debt and cutting funds for infrastructure, reported Hindustan Times.

The audit, tabled in the Legislative Assembly this week, said these programmes accounted for 15 per cent of the state’s revenue expenditure in 2023–24, pushing the government to borrow heavily and reducing investments in long-term infrastructure projects.

The five schemes — Gruha Lakshmi, Gruha Jyothi, Anna Bhagya, Shakti, and Yuva Nidhi — were allocated Rs 36,537.96 crore for the financial year, with almost the entire amount utilised.

Gruha Lakshmi, which pays Rs 2,000 a month to women heads of families, cost the most at Rs 16,964 crore.

Gruha Jyothi, offering free electricity, cost Rs 8,900 crore, while Anna Bhagya’s free rice scheme accounted for Rs 7,344.68 crore.

The Shakti free travel scheme for women cost Rs 3,200 crore, and Yuva Nidhi scholarships accounted for Rs 88.88 crore.

According to the report, the state’s overall spending grew by 12.54 per cent compared to the previous year, while revenue growth stood at just 1.86 per cent.

This mismatch pushed Karnataka into a revenue deficit of Rs 9,271 crore and raised the fiscal deficit from Rs 46,623 crore in 2022–23 to Rs 65,522 crore in 2023–24.

“Implementation of the schemes resulted in the increase in growth of expenditure… which was the contributing factor of Revenue Deficit of Rs 9,271 crore,” the report said.

To bridge the gap, the state borrowed Rs 63,000 crore in net market loans in 2023-24, which was Rs 37,000 crore higher than the previous year.

The CAG cautioned that such debt would create “a massive repayment burden in the near future.”

It noted that capital expenditure fell by Rs 5,229 crore, causing incomplete projects to surge by 68 per cent — a setback to Karnataka’s future growth prospects.

Opposition leader R Ashoka attacked the Congress government, saying: “The Karnataka government, for short-term political gains, is sacrificing the future of Karnataka. If this system continues, Karnataka will be trapped in irrecoverable debt and economic bankruptcy, with guaranteed stagnation in development".

Ashoka further pointed out that the reduction in infrastructure spending has already slowed down development.

“Today’s guarantee schemes are guarantees of future darkness, the CAG has warned,” he added.

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