BENGALURU: With amendments to the Karnataka Fiscal Responsibility Act passed by the assembly, allowing additional borrowing for this fiscal year, the State government can borrow up to Rs 90,000 crore in loans — making up 5 per cent of the Gross State Domestic Product.
Opposition leader and Congress Legislature Party chief Siddaramaiah has raised a red flag over the heavy borrowings under the garb of pandemic and flood compensation. In a series of tweets over the State’s financial status, Siddaramaiah asked the government where all the money went, that it is being compelled to borrow heavily for compensation.
“Government is set to raise loan of Rs 90,000 crore to pay compensation for farmers and to address the pandemic. They claim that coffers are empty. Then what happened to all the money? Did it end up in the Chief Minister and Ministers’ pocket?” Siddaramaiah asked. The Congress leader and former Chief Minister was questioning the delay in distributing compensation to those affected due to the pandemic, as well as three bouts of floods this year alone in Karnataka.
Even as Siddaramaiah claimed that the State government is set to borrow Rs 90,000 crore, finance department officials told TNIE that borrowings, as of now, stand at less than 3 per cent of the GSDP. Karnataka can borrow up to 5 per cent of its GSDP, with the Union government allowing additional borrowing to offset losses arising out of the Covid-19 lockdown slowing down the economy.
“Karnataka’s GSDP is Rs 18 lakh crore, and we can borrow up to 5 per cent of the same. We are borrowing as per approved calendar and haven’t even reached 3 per cent of the GSDP — 5 per cent of GSDP comes to about Rs 90,000 crore, but borrowing is extended up to March next year-end of the fiscal year,” a senior finance official said. If less than 3 per cent, the State’s borrowing currently hovers under Rs 54,000 crore. Officials added that heavy borrowing is conventionally seen during December-January.
“We have the option of carrying forward 1% borrowing of GSDP to the next year. A decision on this will be taken later,” said Ekroop Caur, secretary to the government, Finance (Budget and Resources). If it decides not to borrow up to 5 per cent of GSDP in this year alone, the government can carry forward additional borrowing of Rs 18,000 crore to the next fiscal year.
Highlighting the delay in compensation, Siddaramaiah said 2,24,000 houses were damaged in the 2019 floods, but compensation had been given only to 1,24,000 houses. “There are many houses that are damaged this year as well. When will the govt compensate to all these houses? Compensation is not yet given to last year’s flood victims & comprehensive survey is not yet conducted for this year’s,” he tweeted.