BENGALURU: The Finance Department has advised the State Government to spend judiciously in the light of a cash-crunch and the government exhausting its borrowing capacity.
Referring to the Finance Department’s advice on the state’s fiscal condition, Chief Minister DK Shivakumar on Tuesday said that it was given keeping in mind the interests of the government.
“As the Finance Minister, I know which schemes to discontinue and which to introduce. Prices have skyrocketed while people’s incomes have plummeted; that is why we implemented the five guarantees. We are supporting the livelihoods of farmers and the public,” Shivakumar said.
In its note to the Chief Minister’s office, the department stated, “It would be prudent to be realistic regarding the funding envelope that is available and not to add further to the overhang of pending balance cost of works.”
The Chief Minister said the Centre should release the grants due to the state. “The Centre should release the already announced Rs 5,300 crore for the Upper Bhadra Project,” Shivakumar said.
Meanwhile, Leader of Opposition in Assembly R Ashoka hit out at the Congress government over the Finance Department’s observation.
Ashoka alleged that the State Government was asked that major projects without budgetary allocations could not be taken up unless resources were mobilised. He alleged that the state had “gone bankrupt”, pointing out that the Finance Department had cautioned against taking up schemes worth Rs 1,000 crore that were not provided for in the 2026-27 Budget.
“Karnataka has already used up its borrowing capacity to meet its needs. In other words, it cannot take further loans and permission will not be given. Against the backdrop of schemes announced in the 2026-27 budget, there is no scope to take additional loans to fund such large projects,” Ashoka said.
He said the state was facing a “financial drought” even as farmers were suffering due to the natural drought.
“I have never seen the Finance Department do something like this,” he said.
Ashoka also alleged that the government would continue diverting funds meant for Scheduled Castes and Scheduled Tribes under the SCSP and TSP programmes. He claimed that pending bills in various departments had crossed Rs 2 lakh crore and said transport corporations, irrigation corporations and power companies were facing severe financial stress.
He also pointed to an alleged contradiction over power subsidies, saying Energy Minister K J George had stated that there were no pending subsidies, while the Finance Department had indicated that subsidies had to be released to the Energy Department.