Karnataka recorded better growth than national average; rising debt a concern

According to the budget’s mid-term fiscal plan (MTFP), the state grew at a rate of 7.9 per cent, compared with the national average of 7.0 per cent, in 2022-23.

The Gross State Domestic Product (GSDP) growth rate, however, fell below the 11 per cent rate recorded in 2021-22, when India’s Gross Domestic Product grew at a rate of 8.7 per cent. This growth meant that the GSDP will reach Rs 23.33 lakh crore by the end of the 2023-24 fiscal.

While the budget size was estimated to be at Rs 2,61,977 crore in the 2022-23 fiscal, it was revised to Rs 2,79,540 crore thanks to an improvement in revenue collection. For 2023-24, Chief Minister Basavaraj Bommai, who also holds the finance portfolio, has estimated the budget size to be at Rs 3,03,910 crore.

Rs 1,64,653 cr of the amount will be from the state’s own tax revenue, while Rs 11,000 crore will be collected as non-tax revenue. “The state government expects to receive Rs 37,252 crore by way of the share of central taxes and Rs 13,005 crore in the form of grants from the Government of India,” he said Friday.

This will be supplemented by borrowing Rs 77,750 crore—equivalent to three per cent of the GSDP. Against an income of Rs 3,03,910 crore, the total expenditure is estimated at Rs 3,09,182 crore.

The budget also projects that the state’s outstanding debt to increase by around 11 per cent, from Rs 4.97 lakh crore to Rs 5.53 lakh crore. This would mean that the amount allocated for repaying loans and debt servicing will also see a spike.

The MTFP, highlighting the growing debt, said that “the ratio of interest payments to revenue receipts is increasing from 10.6 per cent in 2019-20 to 15.1 per cent in BE 2023-24. This calls for urgent measures to improve revenue receipts and to reduce future borrowings”.