Balancing Welfare, Growth, A Challenge for Siddaramaiah

Borrowing may go up to fund guarantees; Budget likely to cross ₹4L cr

- Devaraj B Hirehalli @Bengaluru

As Karnataka Chief Minister Siddaramaiah presents his 16th budget on March 7, the challenge would be to strike a balance between development and social welfare schemes.

The increase in borrowing will be inevitable in order to fund the five guarantees on one hand, and ensure infrastructure development, which is key to growth.

In the previous budget, Gross State Domestic Product (GSDP) was projected to be Rs 28,09,063 crore, and borrowing was proposed at Rs 1,05,246 crore, a 23 per cent hike compared to FY 2023-24 (Rs 83,818 crore).

This time, with the GSDP projected to be Rs 32,00,000 crore, borrowing would surpass Rs 1.5 lakh crore. The state's outstanding liabilities are estimated to be 24 per cent of the GSDP at the end of 2024-25, which means debt stood at Rs 6.65 lakh crore. The state can borrow up to 25 per cent of its GSDP as per the Karnataka Fiscal Responsibility Act.