Karnataka's Five Guarantee Schemes: A Fiscal Balancing Act

The Karnataka government's five guarantee schemes make up 15% of its revenue expenditure, according to a CAG report. Implemented by the Congress after its May 2023 election victory, the schemes have increased fiscal pressures, resulting in a revenue deficit and necessitating increased market borrowing.

The Karnataka government's ambitious five guarantee schemes, launched shortly after the Congress took office in May 2023, have occupied 15% of the state's revenue expenditure, according to a recent CAG report. These pre-poll promises have significantly influenced the state's fiscal dynamics.

The schemes include 'Gruha Jyothi' for free electricity, 'Gruha Lakshmi' providing monetary support to women, and 'Anna Bhagya' ensuring rice supply to BPL families. The 'Yuva Nidhi' supports unemployed graduates, while the 'Shakti' scheme offers free bus travel for women.

This ambitious rollout has fueled a 12.54% increase in expenditure growth compared to the previous year, causing a rise in the revenue deficit to Rs 9,271 crore. The resulting fiscal strain prompted an increase in market borrowing and a reduction in infrastructure investment by Rs 5,229 crore, as detailed in the CAG report.