The budget session for Karnataka is to be present on 4th March 202. Chief Minister Basavaraj Bommai is going to present this year's budget for the state. As the state has seen improvement in revenue, the government still wants to borrow state taxes.
According to the reports, Chief Minister Basavaraj Bommai is looking to increase total expenditure by over 2.5 lakh crore by 10%. The state is expected to get Rs 9,000 crore and it may be used in infrastructure development. And this loan government is likely to borrow from other sources, but this will add a debt burden on the state. An official said that the total liabilities would be of nearly Rs 4.6 lakh crore (27% of gross state domestic product) will increase by about 5%.
A finance department official said "We are emerging from the shadow of the pandemic and it is important that we increase spending. So, it is inevitable that we borrow more."
Dr Vinod Vyasulu, economist and former director of Centre for Budget and Policy Studies said "In the guise of Cati Shakti scheme, the Centre is compelling states to borrow. But this is a debt trap for states."
While M Covid Rac, former director of the National Institute of Public Finance and Policy said, "Karnataka is known for its fiscal discipline and, hopefully, its borrowings will be well within the permissible limit of 4% of OSDP. The Centre proposed the interest-free loan due to the prevailing situation. It's up to the state to take it."