August 20, 2025: The Karnataka government borrowed a staggering ₹63,000 crore during the financial year 2023–24 to meet the cost of its guarantee schemes and the resulting fiscal gaps, according to a report released by the Comptroller and Auditor General (CAG). The figure represents a sharp rise from the previous year’s net debt of ₹26,000 crore.
The CAG report highlights that the additional borrowing of ₹37,000 crore was largely directed toward financing five major welfare schemes launched by the Siddaramaiah-led Congress government. While these schemes aim to provide social assistance across sectors, concerns have been raised about the sustainability of the state’s finances in the long term.
Over the past two years, Karnataka allocated a total of ₹89,428 crore to its guarantee schemes, which include Gruha Lakshmi (₹47,773 crore) for women, Gruha Jyothi (₹18,900 crore) offering free electricity up to 200 units, Shakthi (₹8,815 crore) providing free bus travel for women, Anna Bhagya (₹13,564 crore) distributing additional rice to BPL cardholders, and Yuva Nidhi (₹376 crore) for unemployed graduates and diploma holders. The government has also recently launched the Bhu Guarantee scheme to provide title deeds to state residents, adding further fiscal commitments.
The report notes that to fund these schemes, ₹5,299 crore was diverted from infrastructure funds, raising questions about the state’s investment in critical capital projects. Analysts warn that the diversion of funds from infrastructure could have long-term consequences on Karnataka’s economic growth.
Opposition parties, including the Bharatiya Janata Party (BJP) and Janata Dal (Secular) (JD(S)), have criticised the state government for excessive borrowing and fiscal mismanagement. They argue that the welfare schemes, while socially beneficial, are not being supported by adequate financial planning.
The CAG report underscores the need for a balanced fiscal approach that supports social welfare while ensuring economic stability. With the government continuing its ambitious welfare agenda, maintaining fiscal prudence remains a key challenge for Karnataka.
